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Bull hunts for rebound in Tenet

Posted
5/5/2010 11:57:00 AM
By: optionMONSTER
Referenced Stocks:THC

Tenet Healthcare is clawing its way back from a selloff today, and one investor is looking for more upside.

THC Chart optionMONSTER's Heat Seeker tracking system detected the purchase of 10,000 November 6 calls for $0.82 and the sale of a matching number of November 5 puts for $0.47. Volume was more than 11 times open interest in both strikes.

THC fell 1.53 percent to $5.78 in morning trading and is down 8 percent in the last three sessions after retreating from $6.50, a level that's been holding the hospital stock in check for more than two years. The debt-laden company reported better-than-expected earnings yesterday afternoon but its revenue slightly missed forecasts.

The option strategy cost a net $0.35 to implement and will simulate owning the shares, delivering leveraged gains on a move above $6 through expiration. If THC closes between $5 and $6, the investor will only lose their $0.35 debit. Below $5, they face additional losses because of the short interest in the puts.

The transaction occurred as the shares rebounded from a session low of $5.66, a few cents above their 100-day moving average.

Overall options volume in THC rose to six times greater than average.

(Chart courtesy of tradeMONSTER)