AmerisourceBergen is in the midst of a steady uptrend, and one
investor is using options to smooth the ride.
optionMONSTER's tracking systems detected the purchase of 1,660
July 42 calls for $0.75 and the sale 2,150 August 43 calls for
$0.90. Volume was below open interest in July but not August,
suggesting that a short position was rolled forward by one month
and up to the higher strike.
The trade was probably the work of an investor who owns shares is
the drug distributor and has been selling calls to earn income.
Adjusting the position yesterday allows the trader to collect an
additional $1 of upside on the stock plus a small credit while
increasing the number of contracts.
ABC fell 0.07 percent to $42.28 yesterday and is up 24 percent so
far this year. It touched an all-time high of $43.47 last week. The
last earnings report on April 28 beat estimates, and management
raised full-year guidance.
Companies in the industry have been climbing for years by helping
health insurers cut pharmaceutical costs. Investors often use
covered call strategies on such names to craft positions that
perform similarly to bonds, with defined profit and modest risk.
(See our Education section)
ABC's next earnings report is scheduled for the morning of July 28.
Overall option volume in the name was 8 times greater than average,
with calls outnumbering puts by 5 to 1.
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