Moderately bullish trade boosts Tenet Healthcare (THC) put volume

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Shares of 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.

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

This article appears in: Investing , Options

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Karla Yeh

Karla Yeh

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