The trade is turning cautious in WellCare Health Plans, which
reports earnings in a month.
optionMONSTER's Depth Charge tracking program detected the purchase
of almost 5,100 February 40 puts against open interest of just 286
contracts. Premiums rose from $0.50 to $0.75 as the trades crossed,
with the largest blocks priced for $0.70 and $0.75.
Those puts lock in the price where investors can sell shares in the
health insurer, so they can appreciate in value if the stock
declines. They might have been used by an investor looking to
hedge a long position
in the name or by a speculative bear who doesn't want the risk of
shorting the stock. (See our
section for more on how options can be used to manage trade more
safely than buying and selling common equity.)
WCG is down 0.47 percent to $46.33 in morning trading. It gapped
lower on Oct. 31 after earnings missed expectations and management
lowered full-year guidance. Shares have been languishing since
while remaining below their 50-day moving average, which could be
leading some chart watchers to expect more downside.
The company's next earnings report is scheduled for Feb. 13 before
Total option volume in WCG is 7 times greater than average so far
today, with puts outnumbering calls by almost 500 to 1.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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