Options Trading News

August 7, 2013  Wed 12:20 PM CT

Omnicare has seemed unstoppable recently, and traders are looking for more.

optionMONSTER's Heat Seeker monitoring system detected the purchase of more than 2,700 September 60 calls, most of which priced for $0.30. These are all new positions, as there was no open interest at the strike before the trades appeared.

The long calls lock in the price where shares can be purchased in the health-care company, which is already up 53 percent so far this year. Investors use the contracts to obtain cheap upside exposure, preventing them from missing a rally while limiting potential losses in a pullback. (See our Education section for more on how options can be used to manage risk.)

OCR is up 2.04 percent to $55.40 in afternoon trading, down slightly from an all-time high of $55.85 reached earlier in the session. The stock has been riding a wave of strong earnings reports as business grows and generic drugs help contain costs.

Total option volume is more than 15 times greater than average so far today, according to the Heat Seeker. Calls outnumbered puts by a bullish 18-to-1 ratio.
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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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