The bulls want to start next week with a bang as Health Net
optionMONSTER's Heat Seeker monitoring system detected the purchase
of some 2,000 June 32.50 calls for $0.54 and the sale of an equal
number of June 35 calls for $0.30. There was no open interest at
either strike before the trade appeared, indicating that new money
was put to work.
The trade cost $0.24 and has the potential to earn a profit of more
than 900 percent if the California-based health insurer closes at
or above $35 on expiration. That's less than 25 percent above its
current price, which shows the kind of leverage that can be
generated with options. (See out
section for more on the strategy, known as
bullish call spread
HNT is off 0.27 percent to $28.21 in afternoon trading. The stock
gapped violently lower almost a year ago after a spike in medical
claims caused profit to miss expectations by a wide margin. Shares
bottomed out in August and have been working their way higher
Today's call spread is looking for the stock to fill that bearish
gap from May 2012, something that could happen if there's a good
earnings report on Monday morning.
Total option volume is 47 times greater than average in the stock,
according to the Heat Seeker. Only 12 puts have traded in the
session, a reflection of the bullish sentiment.
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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