Natus Medical has been rallying hard, and the bulls aren't done
optionMONSTER's Heat Seeker monitoring program detected the
purchase of 1,466 July 30 calls for $2.66 and the sale of an equal
number of February 22.50 puts for $1.11 on Friday. Volume as more
than twice the previous open interest in each strike, indicating
that new positions were initiated.
locks in the price where shares can be purchased, while
generates income but creates an obligation to purchase the stock if
it falls. Combining the two strategies is highly bullish because
both benefit from the stock climbing. Friday's trade cost $1.55 and
provides upside for the next six months. (See our
BABY rose 0.54 percent to $24.34 and has more than doubled in the
last six months. Much of that rally came after the provider of
medical products for infants reported better-than-expected results
and raised its guidance in October.
The unusual aspect of last week's trade is that the investor sold
shorter-term puts that are
closer to the money
than the calls purchased. That lets the trader receive additional
premium to offset the greater
in the July contracts.
BABY's next earnings report is scheduled for Jan. 29, before the
opening bell. Total option volume on Friday was 14 times greater
than average in the session, according to the Heat Seeker.
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.
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