Options Trading News

May 1, 2013  Wed 3:16 AM CT

As HCA Holdings came off all-time highs yesterday, one trader was betting that the health-care provider will remain range-bound.

optionMONSTER systems show that a trader sold 4,000 each of the June 39.50 puts and 40.50 calls for $1.70 and $1.65 respectively. Volume was above the previous open interest at each strike, indicating new positioning.

The overall trade is a short-strangle play that takes in a credit of $3.35, which is the maximum gain if HCA remains between $39.50 and $40.50. The position can profit from $43.85 down to $36.15 at expiration. (See our Education section)

HCA fell 1.19 percent to $39.89 yesterday after hitting a lifetime intraday high of $41.83 in the previous session. Although the stock has traded below $36 on two occasions in the last two months, it hasn't closed below that level since Feb. 25.

More than 13,000 HCA options changed hands on the day, compared to the daily average of 4,000 in the last month.
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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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