Community Health attracts buyers

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A large trader is hoping for a strong quarterly report from Community Health Systems later this month.


optionMONSTER's Heat Seeker monitoring program detected the purchase of 5,400 September 49 calls yesterday, most of which priced for $2.05. Volume dwarfed open interest of just 55 contracts, which indicates that new money was put to work.

Long calls lock in the price where investors can buy a stock, provide a relatively inexpensive way to profit from a rise in the stock. Traders use them to avoid missing a rally while limiting the risk, but the contracts can expire worthless if shares stall or drop. (See our Education section)

CYH fell 2.85 percent to $44.93 yesterday, surrendering early gains as the broader market headed lower. The hospital operator had surged more than 8 percent in the preceding session after rival HCA pre-announced strong quarterly results and raised full-year guidance.

Community Health is slated to report its numbers after the closing bell on July 31. Total option volume was 6 times greater than average in the session, with calls outnumbering puts by a bullish 33-to-1 ratio.



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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.



This article appears in: Investing , Options

Referenced Stocks: CYH

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