$THC call prices rocket sevenfold

Bullish option traders collected huge profits today in Tenet Heathcare, one of the few winners in today’s market selloff.

On Jan. 12, Investitute’s tracking systems detected the purchase of 7,650 February $17 calls for $0.40 with shares at $15.61. These were clearly new positions, as open interest in the strike was only 723 contracts before the trades occurred. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls sold for $2.75 at the end of today’s session, nearly 7 times their purchase price. The stock rose 26.1% in the same time frame, a large move but nowhere near that of its options.

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.

THC was up 2.46% to $19.61 today. The health-care service provider has rallied since announcing a major restructuring and layoffs earlier this month.