Tenet Healthcare Corp. (NYSE: THC )
are hovering around their 52-week low, which could be the bull case
for the short put action we saw out of the gate on Monday. THC did
not announce any notable news today, but at least one investor
appears to have boosted put volume on a bet that the stock will
experience limited downside during the near term.
The September 4 puts were active during morning trading. At 9:59
a.m. EDT, a block totaling 15,000 of these near-the-money puts
changed hands for 10 cents per contract. This price was right at
the bid when the volume hit the tape. Current open interest in this
line is just 510 contracts, indicating this moderately bullish
investor opened short put positions.
Maximum gain on this short put trade is the credit collected, or
a total of $150,000 for the 15,000-lot. If the stock is trading
higher than $4 at expiration, the investor gets to keep all of the
credit collected. On the other hand, if THC shares drop
significantly and are trading below the breakeven level of $3.90 at
expiration, the investor will lose money as the stock moves toward
zero. Maximum loss on this trade is $3.90 per contract (the
investor could lose a total of $5.85 million).
THC shares were relatively unchanged around $4.22 as of 10:16
a.m. ET. The company announced earnings of seven cents per share on
Aug. 3, beating estimates by one cent, so the market does not
expect its next report until the beginning of November.