Call prices rocket fourfold in $CI

Bullish traders are cashing in on Cigna options ahead of quarterly results early next month.

On Tuesday, Investitute’s tracking systems found that 3,500 Weekly $180 calls expiring on Aug. 24 were purchased for $1.45 as part of a bullish spread with shares at $169.81. This was clearly fresh buying, as open interest in the strike was a mere 446 contracts before that session began.

Those calls traded for $5.65 today, about 4 times their purchase price. The stock rose 5.09% in the same time frame, showing how quickly options can far outpace gains in 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.

CI was up 1.25% to $178.09 today. The health-service provider is scheduled to report earnings on Aug. 2 before the market opens.