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August 13, 2013  Tue 3:47 AM CT

WCG: SEE CHART GET CHAIN FIND STRATEGIES
Someone apparentely thinks that Wellcare Healthcare is on solid ground despite a big move in recent months.

optionMONSTER's monitoring systems detected the sale of almost 2,100 September 60 puts for $0.85. Volume was more than twice previous open interest at the strike, indicating that new positions were initiated.

Selling puts obligates the investor to buy a stock if it's below a certain level on expiration, while letting him or her collect a credit in return. The strategy is used when they like a company but don't want to shell out cash getting long at current levels. It also reflects a belief that downside is limited. (See our Education section)

WCG rose 0.51 percent to $67.40 yesterday and is up 31 percent in the last two months. Much of that rally occurred on Aug. 7 after the health insurer reported strong quarterly results and raised guidance.

The shares peaked above $60 in April and August. That could make some chart watchers think that level will now become support, helping to explain yesterday's put sale.

Total option volume was almost 4 times greater than average in the session.
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Market Level Making You Nervous, Huh? Part 3

In last week's article, we discussed how important the extra cash you save by using the Stock Replacement Strategy over buying the actual stock is! That extra cash in our account instead of being unnecessarily tied up in a stock position allows us to buy the puts we would need to protect our downside in the case of a major sell-off.

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