Bulls double money in $THC

Shares of Tenet Healthcare jumped after quarterly results, yielding large gains on upside option positions.

On Jan. 2, Investitute’s proprietary programs flagged the purchase of 10,000 January 2020 $20 calls for $3.75 with shares at $17.23. This was clearly a new position, as open interest in the strike was only 404 contracts before that session began.

Those calls sold for $10 today, more than 2.5 times their purchase price. The stock rose 57.28% in the same time period, a huge move but still far below that of its options on a relative basis.

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.

THC surged 11.15% to $26.92 today. The health-care service provider topped earnings expectations and issued a strong outlook after the market closed yesterday.