$TNDM bulls triple their money

Option traders scored exponential gains on upside positions in Tandem Diabetes Care today.

On Oct. 10, Investitute’s tracking systems detected the purchase of 2,500 November $40 calls for $2.10 as part of a bullish roll with shares at $33.89. Open interest in the strike was only 552 contracts before that session began, showing that this was a new position.

Those calls traded up to $5.80 this morning, nearly 3 times their purchase price. The stock rose 29.53% 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 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.

TNDM reached an intraday high of $44.10 early today but then pulled back with the broader market to close at $39.99, off 1.62% on the session. The medical-device manufacturer raised its outlook after the market closed yesterday.