$TPX calls jump threefold

Tempur Sealy has rocketed higher this year and continues to yield big profits on upside option positions.

On Dec. 20, Investitute’s market scanners identified the purchase of 5,000 March $45 calls for $4.30 as part of a bullish spread with shares at $43.49. This was clearly a new position, as open interest in the strike was only 47 contracts before that session began.

Those calls ended today marked at $13.55, more than 3 times their purchase price. The stock rallied 34.51% in the same time period, showing how options can far outperform their underlying shares.

It is the third winning trade in the name posted on Investitute in less than two weeks.

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.

TPX climbed to $59.19 this afternoon, not far from its 52-week high of $59.51, before ending the session off 0.03% to $58.50. The mattress company missed earnings estimates but reported strong sales on Feb. 14.