$BHC calls triple in one-day trades

Bausch Health drew bullish option positions in several strikes yesterday, and they all paid off today.

Investitute’s proprietary programs identified the following activity yesterday in contracts that expired this afternoon. Shares were trading around $21.04 at that time:

–2,100 04January $21.50 calls were bought for $0.06 to $0.20 above open interest of 397 contracts. Those calls traded for $0.32 today, 2.5 times their average purchase price.
–1,400 04January $20.50 calls were bought for $0.30 to $0.70 above open interest of 331 contracts. Those calls traded for $1.25 today, 2.5 times their average purchase price.
–1,100 04January $21 calls were bought for $0.10 to $0.38 above open interest of 580 contracts. Those calls traded for $0.73 today, 3 times their average purchase price.

Shares were up 3.19% at the same time, underscoring how quickly options can far outpace gains in their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

BHC was up 3.71% today to close at $21.25. Piper Jaffray upgraded the health-products company to “overweight” from “neutral” and raised its price target to $27 from $22 on Jan. 2.