Options Trading News

November 6, 2012  Tue 10:13 AM CT

Humana shares remain range-bound, and a large call strategy appears to be looking for limited gains.

A trader bought 9,450 November 80 calls for $0.90, but the volume was below open interest of 19,158 and therefore could be a closing or an opening position, according to optionMONSTER's Heat Seeker system. At the same time, he or she sold the same number of November 85 calls for the bid price of $0.15 at volume that was more than triple the open interest at that strike, clearly a new position.

If the lower-strike trade was opening a new position, this could be a call spread that is looking for a run higher in the next couple of weeks. If the lower-strike calls were a closing trade, this could be a rolling a short-call position up to the higher strike. In either case the trader does not see HUM above $85 in the near term. (See our Education section)

HUM is off a penny to trade at $75.51. The health-insurance company has been clinging to the $75 level for the last month after climbing off a 52-week low of $59.952 set on the last day of July.

Yesterday's earnings release did nothing to shake the stock out of its doldrums. The action has the 30-day historical volatility down to lows around 17 percent.
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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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