More upside seen for Express Scripts
Mike Yamamoto | [email protected]
optionMONSTER's tracking systems detected the purchase of 4,000 August 67.50 calls for $1.58 and the sale of an equal number of August 70 calls for $0.58, resulting in a cost of $1. Volume was below open interest at the lower strike, so there are two possible explanations for the trade.
One is that the investor owns shares in the pharmacy-benefits company and had previously sold the 67.50s to earn income in a covered-call strategy. He or she then rolled that position up to the 70s, raising the eventual exit price by $2.50.
Alternatively, both halves of the trade may have been opened. In that case, it was a bullish call spread with potential profit of 150 percent on a move to $70 by expiration. (See our Education section)
ESRX is up 0.73 percent to $67.22 in midday trading and has risen 24 percent this year. It broke to new all-time highs earlier this month and has steadily reported strong quarterly results. The next release is scheduled for Tuesday morning.
Total option volume is twice the daily average so far today, with calls outnumbering puts by almost 12 to 1.