Covidien is contending with long-term resistance, and one
investor apparently thinks that its advance will be slow.
optionMONSTER's tracking systems detected the sale of 9,702 January
60 calls, most of which priced for $1.35. Volume was more than 300
times open interest in the strike.
COV rose 1.07 percent to $54.01 in morning trading. The maker of
medical devices is up about 50 percent since the end of last
summer, fueled by strong financials and growing customer demand.
Its last earnings report on April 21 beat estimates on the top and
bottom lines, and management raised full-year guidance.
Nonetheless, the shares topped out at an all-time high of $57.65
last month, slightly above their previous high around $57 in
September 2008. Some chart watchers may expect this level to hold
COV in check for some time into the future, which explains the call
The trade compels the investor to sell shares for $60 if it pushes
above that level. It was probably the work of a long-term
shareholder who wants to earn income on an existing position in the
equity. Known as a covered call, it's one of the most popular
option strategies. (See our Education section)
The transaction pushed total options volume in COV to almost 6
times greater than average so far today.
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