DaVita has had a nice run, but now one investor is positioning
for a drop ahead of tomorrow's earnings report.
optionMONSTER's Depth Charge tracking system detected the
purchase of 2,575 February 70 puts for $0.30 and the sale of an
equal number of 2,575 February 80 calls for $0.35. Volume was more
than 8 times open interest in both strikes.
DVA is down 0.72 percent to $76.21 in morning trading but is still
up 10 percent in the last month. The provider of dialysis and
medical-testing services hit an all-time high of $78.28 on Friday
after announcing that it would purchase closely held DSI Renal.
The shares have been climbing despite worries about possible
changes in Medicare payments. More clarity on that issue may emerge
when the company reports earnings after the bell tomorrow.
Today's option trade is essentially bearish and will make money if
DVA pushes toward or below $70. It could have been the work of a
shareholder who wants to hedge against a drop. In that case it
would be known as a collar and ensure a minimum exit price of
$70.05 and a maximum of $80.05.
It could have also been done naked as an outright bearish play, in
which case it would lose money if DVA rallies over $80. If the
stock remains between $70 and $80 on Feb. 18, the position will
The trade pushed total option volume in DVA to 24 times greater
than average so far today.
(Chart courtesy of tradeMONSTER)
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