CVS Caremark has been trapped in a range, and one investor wants to give it more room to the upside.
optionMONSTER's tracking programs detected the sale of about 2,300 September 80 calls for $0.87 and the purchase of an equal number of August 77.50 calls for $1.18 calls. Volume was below open interest in the shorter-term contracts.
He or she probably owns shares in the pharmacy company and previously wrote the 77.50 calls to earn income. Now that expiration is approaching on Friday, he or she bought them back and rolled to the 80s. Making the adjustment cost about $0.31 but raises their eventual exit price by $2.50. It also keeps them in the trade for an additional month. (See our Education section.)
CVS rose 0.71 percent to $78.36 yesterday. It more than doubled between late 2011 and early May, but has remained between $74 and $79 since. The most recent earnings report on Aug. 5 also beat expectations.
Total option volume was almost triple average amounts in the session.
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