Calls predict good year for Baxter

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Baxter has partly recovered from a brutal springtime selloff, and one investor is looking for more gains this year.

optionMONSTER's Heat Seeker tracking system detected the purchase of about 20,000 January 2012 55 calls for $2.89. Volume was more than 16 times existing open interest in the strike.

BAX BAX fell 0.14 percent to $50.55 yesterday but is up 24 percent since bottoming out in early July. The supplier of blood and related products has been pushing higher after a major selloff in April, when management slashed earnings guidance.

More recent news has been more sanguine. The last earnings report on Oct. 21 beat forecasts on both the top and bottom lines, and management announced a $2.5 billion stock buyback last month.

The shares have been consolidating around their current level for more than two months and seem to be finding support at their 50-day moving average (black line on chart). They have also been pushing against the lower end of a bearish gap from April (red line and arrow)--a void that yesterday's call buyer apparently thinks will now be filled.

The next scheduled events that could serve as potential catalysts for BAX is its appearance at the JP Morgan Healthcare Conference after the bell on Jan. 11, and its fourth-quarter earnings release in the pre-market on Jan. 27.

Overall option volume in the stock was 7 times greater than average yesterday, with calls outnumbering puts by 75 to 1.

(Chart courtesy of tradeMONSTER)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options


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