Baxter International collapsed on April 22 after cutting guidance, and now one trader is apparently using a key chart level from that session to map a strategy on the stock.
optionMONSTER's tracking systems detected the sale of about 8,500 January 2012 52.50 calls, most of which priced for $2.73, against open interest of just 81 contracts. The transaction dominated activity in the company, which sells medical supplies including blood products.
BAX rose 0.27 percent to $45.25 in early afternoon trading and is up 11 percent since the beginning of last month. The shares are starting to rebound after falling near $40 between May and July, their lowest price in almost four years.
The company cut its full-year growth forecast by more than half in April to reflect the impact of health care legislation, causing the stock to gap down to $52 from near $59.
Today's call seller is apparently targeting that gap, wagering BAX will partially fill it before running out of energy. The trader may have written the contracts against an existing long position in the stock or as an outright bet the shares have limited upside.
Overall options volume in the name is almost twice the average level so far today.
(Chart courtesy of tradeMONSTER)
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