HCA has been on a tear, but one investor is playing it safe.
optionMONSTER's tracking programs detected a surge of volume in the
Tennessee-based hospital operator as a highly conservative
strategy was adjusted. A block of 5,115 June 23.50 calls was bought
for $14.60 and the same number of September 31 calls was sold for
$8.30. Volume was below open interest in the April contracts,
indicating that an existing position was closed and rolled forward
The investor almost certainly owns HCA shares and has been using
to manage the trade. Yesterday's transaction let him or her raise
the selling price of the stock by $7.50. The trader paid $6.30 to
make the adjustment and is now obligated to hold the shares for an
additional three months.
HCA fell 1.6 percent to $37.61 yesterday, which makes the calls
deep in the money. It would require a drop of more than 17 percent
for the investor's profits to be at risk. While unusual, such
strategies do appear occasionally as traders respond to low
interest rates by crafting positions more akin to bonds than
equity. (See our
section for more on how to
turn time into money
with calls and puts.)
Total option volume in the name was 6 times greater than average in
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