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.
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