Calls double overnight in $ZBH

It took less than 24 hours for bullish option positions in Zimmer Biomet to pay large gains.

Just yesterday, Investitute’s prorietary programs flagged the purchase of 1,000 September $120 calls for $3 as part of a bullish roll with shares at $117.71. Volume was well above the strike’s open interest of 558 contracts, showing that this was a new position.

Those calls sold for $8.25 this morning, more than 2.5 times their purchase price. The stock rose 7.7% at the same time, illustrating the kind of leverage that options can quickly achieve.

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.

ZBH jumped 7.76% to $126.20 today. The medical-implant manufacturer’s second-quarter earnings topped expectations this morning.