Options Trading News

October 23, 2013  Wed 4:14 AM CT

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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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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