Baxter International is trying to fight its way back from a big
crash last year, and yesterday the bulls targeted more upside.
optionMONSTER's Heat Seeker tracking system detected the purchase
of about 25,000 August 55 calls on the medical-product company
against open interest of just 985 contracts. Most of the trades
priced over the space of a few minutes for $0.77, suggesting that
they were the work of a single large investor.
BAX ended the session up 0.68 percent to $48.85. It crashed last
April after issuing weak earnings and guidance. The company
encountered more bad news last month, when its second-quarter
outlook was below forecasts and management said a facility in
Puerto Rico was getting reviewed by the Food and Drug
The stock fell on that news but appears to be bouncing around the
$48 level, which corresponds to a major trading session on Sept.
24, when the stock swung widely on heavy volume. Traders often look
for such levels as support in subsequent weeks and months.
The company, which mostly provides blood products, had warned that
last year's federal health-care legislation could hurt its
profitability. While it isn't clear, one potential catalyst for
yesterday's call buying could be that a federal judge declared the
law unconstitutional last week. Another judge has ruled similarly
while two more have upheld the statute, which will go to the
Overall option volume in BAX was 6 times greater than average
yesterday, with calls outnumbering puts by 12 to 1, according to
the Heat Seeker.
(A version of this post appeared on InsideOptions yesterday.
Chart courtesy of tradeMONSTER.)
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