OptionsHouse

Options Trading News

February 5, 2013  Tue 1:47 AM CT

HCA: SEE CHART GET CHAIN FIND STRATEGIES
HCA has been on a tear, but one investor is playing it safe.

optionMONSTER's tracking programs detected a surge of volume in the Tennessee-based hospital operator as a highly conservative in-the-money strategy was adjusted. A block of 5,115 June 23.50 calls was bought for $14.60 and the same number of September 31 calls was sold for $8.30. Volume was below open interest in the April contracts, indicating that an existing position was closed and rolled forward in time.

The investor almost certainly owns HCA shares and has been using covered calls to manage the trade. Yesterday's transaction let him or her raise the selling price of the stock by $7.50. The trader paid $6.30 to make the adjustment and is now obligated to hold the shares for an additional three months.

HCA fell 1.6 percent to $37.61 yesterday, which makes the calls deep in the money. It would require a drop of more than 17 percent for the investor's profits to be at risk. While unusual, such strategies do appear occasionally as traders respond to low interest rates by crafting positions more akin to bonds than equity. (See our Education section for more on how to turn time into money with calls and puts.)

Total option volume in the name was 6 times greater than average in the session.
Share this article with your friends


Related Stories

HCA

Bulls keep coming back to HCA

May 29, 2015

The hospital operator beat earnings estimates the last time results came out, and revenue was better than expected in the two most recent quarters.

HCA

Traders are rolling higher with HCA

May 14, 2015

Traders are extending bullish positions in the hospital operator, which beat earnings and revenue estimates on May 5 thanks to higher admissions.

Invest Like a Monster - San Diego: June 26-27

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

Long synthetic call

Long and short Synthetic stock are two of the six basic synthetic positions that exist. Number three on our list is the Synthetic Long Call...

View more education articles »