$CNC bulls turn huge profits at highs

Option traders are logging huge profits in Centene (CNC) today after its earnings report.

Just yesterday on Jun. 15, Market Rebellion’s Unusual Activity Service found that 5,000 June $72.50 calls, expiring this Friday, were bought for $0.55 as part of a complex bullish spread above open interest of just 1,808 contracts with shares at $68.99.

Market Rebellion co-founder Pete Najarian cited the activity on CNBC’s “Halftime Report” yesterday.

Those calls have traded for as much as $2.95 so far today, more than 5 times their purchase price. The stock rose 8.81% in the same time frame, illustrating 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.

CNC made a new all-time high today at $75.25 and was last at $73.60, up 5.17% on the session in afternoon trading. The health-care company held its Investor Day today.