Options Trading News

December 15, 2011  Thu 10:46 AM CT

One trader is bullish on HCA Holdings as it bounces at a potential support level.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 2,500 March 22.50 calls for $1.50 and the sale of an equal number of March 20 puts for $1.65. The trade pushed total option volume in the hospital operator to almost triple the daily average.

The transaction resulted in a credit of $0.15 and is similar to owning shares but less sensitive to changes in the stock price. It needs a push above $22.50 to earn profits, and won't lose money if the shares remain above $20.

It's similar to activity we saw yesterday, when traders made low-cost wagers with perceived low risk. They're less likely to pay off, coming amid a market where most stocks are tracking the broader market and failing to attract significant investor interest.

HCA is trading at $20.86, up 1.26 percent on the day. The shares peaked around $20 in late August and September before ripping higher in October and November. Some investors may think that this level will now provide support, which could help explain why they the puts were sold at the 20 strike today.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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