Bulls draw healthy gains in $THC

Option traders racked up big profits in Tenet Healthcare today thanks to strong quarterly results.

On Dec. 21, Investitute’s market scanners identified the purchase of 5,000 June $18 calls in one print for $1.55 with shares at $15.11. This was clearly a new position, as open interest in the strike was a mere 9 contracts before the trade occurred.

Those calls traded for $3.92 at the end of today’s session, 2.5 times their purchase price. The stock rallied 36.7% in the same time period, a large gain but well below that that of its options.

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 jumped 8.91% to $20.77 today. The health-care service provider topped quarterly estimates and raised its full-year outlook after the market closed yesterday.