$HAIN call prices double

A long-term bullish bet on Hain Celestial is already paying off.

On Feb. 7, Investitute’s tracking systems detected the purchase of 17,000 January 2021 $20 calls for $1.93 with shares at $14.61. Open interest in the strike was a mere 68 contracts before that session began, showing that this was a new position. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $4.30 calls this afternoon, more than twice their purchase price. The stock rallied 33.61% in the same time period, a large move but nowhere near that of its options on a relative basis.

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.

HAIN spiked higher by 10.69% to $19.67 today. This morning JP Morgan upgraded the organic-food producer to “overweight” from “neutral” and raised its price target to $20 from $15.