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October 23, 2013  Wed 4:14 AM CT

QSII: SEE CHART GET CHAIN FIND STRATEGIES
Quality Systems is attracting bullish option activity ahead of its earnings report on Thursday.

About 2,300 June 25 calls traded in a strong buying pattern yesterday for $2.15 to $2.35, according to optionMONSTER's Heat Seeker tracking system. These are new positions, as there was no previous open interest in the strike.

These long calls lock in the price where traders can buy the stock through mid-June no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below $25. (See our Education section)

QSII was up fractionally yesterday to close at $23.61 after reaching a 52-week high of $23.74 in the morning. Shares broke out of a tight range in late September and have been rising since.

The health-care IT systems company is scheduled to release its next quarterly report on Thursday before the market opens.

Total option volume in the name topped 4,200 yesterday, more than 16 times its daily average for the last month. Only 245 of those contracts were puts, a reflection of the session's bullish sentiment.
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So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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