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Pullback in HCA brings out the bulls

By: optionMONSTER
Posted: 2/22/2012 4:14:00 AM
Referenced Stocks: HCA

HCA has pulled back, and the bulls are stepping in.

optionMONSTER's Heat Seeker tracking system detected the purchase of about 2,800 March 26 calls for 0.80 and the sale of an equal number of March 28 calls for $0.25. The trade resulted in a cost of about $0.55 and accounted for most of the option volume in the hospital stock.

Known as a bullish call spread , it will earn a maximum profit of about 264 percent if HCA closes at or above $38 on expiration. (See our Education section)

HCA rose 0.36 percent to $25.17 yesterday and has been fighting its way higher since getting hammered along with the rest of the market last summer. It received a bullish combination trade in mid-December and call buying early in the year. Both trades generated huge gains after the company reported strong earnings on Feb. 6 and announced a $2 special dividend.

Since then it has pulled back but seems to be making a higher low and is holding support at its 30-day moving average. That could make some chart watchers believe that further gains are coming.

Overall option volume was more than twice the average amount yesterday, with calls outnumbering puts by 30 to 1.