$DVA call buyers post fast gains

Option traders turned quick profits on upside positions opened in DaVita only three sessions ago.

On Dec. 10, Investitute’s tracking systems detected the purchase of 6,000 January $67.50 calls for $0.40 as part of a bullish spread with shares at $57.11. This was clearly a new position, as open interest in the strike was only 658 contracts before the trade occurred. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $0.80 this afternoon, twice their purchase price. The stock rose 4.06% in the same time frame, illustrating the kind of leverage that can be achieved quickly 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.

DVA was up 1.65% to $58.52 today. The kidney-dialysis service company, which was upgraded to “outperform” from “market perform” at Raymond James on Nov. 28 with a $70 price target, bounced off its 52-week low of $56.89 on Monday.