$HAIN call buyers triple their money

Hain Celestial surged on takeover speculation today, handing large profits to upside option traders.

On June 22, Investitute’s proprietary programs cited the purchase of 4,546 January $36 calls for $2 as part of a bullish spread with shares at $32.64. Open interest in the strike was only 549 contracts before the trade occurred, showing that it was a new position.

Those calls sold for as much as $6.70 today, more than 3 times their purchase price. The stock rallied 29.1 percent in the same time frame, illustrating the kind of leverage that can be achieved through 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.

HAIN spiked to $44.32 this afternoon before closing at $40.89, up 2.64 percent on the session. The organic-food producer rose sharply after Bloomberg reported that Nestle was among the potential companies that might seek to acquire all or part of the company.