Traders rack up gains in $TNDM

Bullish option traders have more than doubled their money in Tandem Diabetes Care.

On Aug. 17, Investitute’s proprietary programs flagged the purchase of 2,999 September $30 calls at the same second for $4.95 to $5.03 with shares at $33.80. Open interest in the strike was a mere 230 contracts before the activity appeared, showing that this was a new position. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $12 today, about 2.5 times their purchase prices. The stock rose 23.9% 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.

TNDM jumped 7.9% to $41.40 today. The insulin-pump manufacturer has been ripping higher all year.