Bulls turn quick profits in $XLV

Option traders have doubled their money in the SPDR Health Care Fund.

On July 9, Investitute’s proprietary programs flagged the purchase of 3,306 September $89 calls in one print for $0.98 with shares at $86.48. This was clearly a new position, as open interest in the strike was only 772 contracts before the activity appeared.

Those calls traded for $2.23 this afternoon, more than twice their purchase price. The stock rose 4.24% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

XLV was up 0.18% today to close at $89.97. Investors have been rotating into health-care and pharmaceutical names in the last month.