MedcoHealth Solutions got slammed last month on a big customer loss, but one investor is now betting that it's on solid ground.
optionMONSTER's tracking systems detected the sale of about 2,500 June 57.50 puts for $1.20. The move obligates the seller to buy MHS for $57.50 if it's below that level on expiration, although the credit earned today would reduce their outlay to $56.30.
The pharmacy-benefits company is down 0.62 percent to $57.43 in late morning trading, and is down 11 percent since mid-May. Most of that drop occurred on May 27, when it lost a large federal-government contract to CVS Caremark. That followed downside in March, when MHS was dropped by California's giant state-pension system.
The stock is now holding support at its 200-day moving average and attempting to make a higher low than earlier in the year.
Despite the bad news on MHS, the pharmacy-benefits industry remains in a longer-term secular uptrend as health administrators shift patients to lower-cost medicines. The sector is also expected to benefit as a large number of major drugs go generic in the next year.
The put selling accounted for most of the options volume in MHS so far today. (See our Education section)
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