$CNC call buyers win again

Bullish option traders are posting large gains in Centene (CNC) today for the third time this week.

On Nov. 8, Market Rebellion’s Unusual Activity Service flagged the purchase of 10,630 December $57.50 calls for $1.40 as part of a bullish roll with shares at $54.27. This was clearly fresh buying, as open interest in the strike was was only 1,399 contracts before the trade occurred.

Those calls changed hands for as much as $3.90 today, nearly 3 times their purchase price. The stock rose to 10.61% 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.

It is the third winning trade in the name posted on Market Rebellion since Nov. 18.

CNC rose to $60.28 this morning but has pulled back to $59.35 this afternoon, off 0.57% on the session. The health-care company has rallied sharply since announcing quarterly results on Oct. 22.