St. Jude draws bullish 3-way strategy

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St. Jude Medical has had a nice pullback, and one bull wants to get on board.

optionMONSTER's Heat Seeker tracking system detected the purchase of 3,250 January 50 calls for $2.30 and 1,750 January 52.50 calls for $1.50. A block of 5,000 January 42.50 puts was sold at the same time for $1.95.

The trade appears to be a long-term bullish wager that will leverage upside in the maker of heart devices. The strategy cost about $35,000 to implement and will behave similarly to owning shares. It's noteworthy that the investor chose to sell puts at $42.50 because that was a resistance level in 2009 and 2010, meaning it could now provide support.

STJ is up 1.77 percent to $47.65 in afternoon trading after issuing a mixed financial report before the bell today. On one hand, there were problems in cardiac rhythm management, its main product area, because of weak demand and delayed regulatory approvals. That caused management to cut full-year guidance.

But the company is doing better in the market for structural heart products--a growing part of revenue after a big acquisition last year. STJ also saw accelerating growth from overseas customers and increased its book value by more than $460 million in the first six months of the current fiscal year.

Overall option volume in the name is 9 times greater than average so far today.



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: STJ

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