OptionsHouse

Options Trading News

May 7, 2013  Tue 2:45 AM CT

WCG: SEE CHART GET CHAIN FIND STRATEGIES
WellCare Health Plans has been pulling back since reporting earnings last week, but one trader apparently believes that any further losses will be limited.

optionMONSTER's tracking systems detected the sale of 2,000 September 50 puts in one print for $2.15. This is clearly a new position, as the open interest in the strike was a mere 57 contracts before the trade appeared.

The put seller is looking for WCG to stay above the $50 strike price through expiration in mid-September. The trader will face the obligation to buy shares if they fall below that level, though the effective price would be $47.85 once the $2.15 credit from the put sale is included. (See our Education section)

WCG lost 1.54 percent yesterday to close at $56.38, having faced resistance at its 50-day moving average for the last three weeks. The health-care provider beat revenue forecasts and raised guidance in its first-quarter report on Friday, but earnings missed esimates.

Total option volume in the name was more than 8 times its daily average for the last month.
Share this article with your friends


OptionsHouse

Premium Services

Upcoming Webinar:

How to Defend Your Portfolio and Profit in a Market Selloff

http://bit.ly/1OSMWU6

Jon Najarian and Sandy Chaikin of Chaikin Analytics demonstrate how to play defense when the market is selling off. And, how to turn misery into money, whether investing in stocks or trading options.

Education & Strategy

The sweet spot

When using the Stock Replacement Strategy, we must remember that in reality, we are doing a STOCK trade. We are just using options. We are replacing the stock position with an option position (long calls).

View more education articles »