Cigna is down big, and investors are hoping for a rebound.
The stock had rallied along with most other health insurers earlier in the year as cost controls drive a surge of profitability. It touched a 3-1/2 year high of $52.95 barely four weeks ago, but closed down 1.70 percent to $41.65 on Friday, and is now attempting to hold its same price range from the first three months of the year.
In one big trade, 3,228 September 46 puts were sold for $4.80, and an equal number of August 46s were bought for $4.08. Volume was below open interest in the August contracts, which suggests that a previously established position was rolled forward by one month.
The investor had probably opened the trade when CI was trading much higher in hope it would stay above $46. Now that it's down, he or she adjusting the trade in hope it will rebound. They netted a credit of $0.72, and will make money from shares pushing higher.
The short puts have a strong inverse correlation to the stock price because they're deep in the money. Rolling the position also spared the investor from being forced to buy CI for $46 at yesterday's close. See our Education Section for more.
Earlier in the session, optionMONSTER's screening programs also detected the purchase of 3,000 September 49 calls for $0.32 against open interest of just 212 contracts. That appeared to be an outright bullish trade.
Overall options volume in CI was more than quadruple the daily average in the session.
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