Bulls quadruple money in $HAIN

Hain Celestial rallied on deal speculation today, handing major profits to upside option traders.

On May 31, Investitute’s tracking systems detected the purchase of 5,300 August $27 calls for $1.20 to $1.45 with shares at $26.29. This was clearly fresh buying, as open interest in the strike was only 188 contracts before the activity appeared.

Those calls traded for $5 this morning, more than 4 times their initial purchase price. The stock rose 19.4% in the same time frame, underscoring how 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.

HAIN was up 1.92% today to close at $29.74. Shares jumped after the New York Post reported that Pilgrim’s Pride plans to make a bid for the organic producer’s protein business.