Bulls double money in $TPX

Option traders turned quick profits today on bullish positions opened in Tempur Sealy only three sessions ago.

On Feb. 12, Investitute’s market scanners flagged the purchase of 5,000 February $55 calls for $1.45 as part of a bullish spread with shares at $53.26. This was clearly a new position, as volume was well above the strike’s previous open interest of 2,482 contracts. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $2.95 today, twice their purchase price. The stock rose 8.84% in the same time frame, underscoring how quickly options can far outperform 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.

TPX was up 2.94% to $56.08 today. The mattress maker missed earnings estimates but exceeded sales expectations before the market opened this morning.