St. Jude Medical has broken key resistance, and the bulls are
optionMONSTER's Heat Seeker tracking system detected the purchase
of 6,000 January 50 calls for $2.25 and the sale of an equal number
of January 40 puts for $2.25. Volume was more than 13 times open
interest in both strikes.
The trade cost nothing to implement and will simulate owning shares
in the medical-device company. It will make money if STJ closes
above $50 on expiration and lose money below $40. The position,
similar to one opened on Jan. 20, will expire worthless between
those two price levels.
STJ rose 1.86 percent to $44.80 in morning trading and is up 10
percent in the last month. It gapped higher yesterday after an
upgrade from Deutsche Bank, which has a $52 price target on the
The move sent the stock above the $45 level that has held it in
check since financial markets collapsed in October 2008. Now that
that resistance has been broken, some chart watchers may expected
The company also reported earnings on Jan. 26 that were slightly
better than expected. On Friday CEO Daniel Starks said at an
investor meeting that its new products will leave rivals "in the
dust" and added that Wall Street analysts don't appreciate the
company's growth potential.
Today's bullish trade pushed total option volume in STJ to 11 times
greater than average, according to the Heat Seeker.
(Chart courtesy of tradeMONSTER)
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