$CFX calls skyrocket 9-fold

Bullish option traders have racked up huge profits in Colfax.

On Jan. 8, Investitute’s tracking systems detected the purchase of 2,000 March $25 calls in one print for $0.40 with shares at $21.14. This was clearly a new position, as open interest in the strike was only 163 contracts before that session began.

Those calls were marked at $3.80 this afternoon, 9.5 times their purchase price. The stock rose 36% in the same time period, a large move but nowhere near that of its options on a relative basis.

Investitute co-founder Pete Najarian updated the trade and cited even more buying in the 18April $30 calls today on CNBC’s “Halftime Report.”

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.

CFX was up 0.81% to $28.60 today. The industrial-engineering company issued a 2019 earnings outlook yesterday that exceeded analysts’ estimates.