OptionsHouse

Options Trading News

September 30, 2013  Mon 5:16 AM CT

EW: SEE CHART GET CHAIN FIND STRATEGIES
Traders are looking for Edwards Lifesciences to rebound after its synthetic heart valve won regulatory approval for broader use last week.

About 3,700 October 75 calls were purchased for $0.20 to $0.75 on Friday, according to optionMONSTER's Heat Seeker tracking system. The volume was well above the strike's previous open interest of 1,097 contracts, indicating that this is fresh buying.

These long calls lock in the purchase price for the stock for the next three weeks no matter how far it might rise. They could be sold earlier at a profit if premiums gain with a rally before then, but the contracts will expire worthless if shares remain below the $75 strike price. (See our Education section)

EW closed Friday up 0.31 percent to $68.79. The medical-device maker hit resistance at the $73 level in August and had fallen for last two weeks but is now trying to get back above its 100-day moving average. Last Monday the Food and Drug Administration granted multiple ways for the company's Sapien heart valve to be implanted.

Friday's call buying pushed total volume in the name to 5,883, more than 10 times its daily average for the last month. Overall calls outpaced puts by 5 to 1.

(A version of this post appeared on InsideOptions Pro on Friday.)
Share this article with your friends


OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »