Income key to Health Management play

optionMONSTER

Health Management has been swinging in a range, and one investor is milking income from the stock.

optionMONSTER's tracking programs detected the purchase of 1,206 February 8 calls for $0.50. Seconds later, an equal number of May 8s were sold for $0.70.

Volume was below open interest in the February contracts but not the May options, which suggests that the investor owns shares in the hospital operator and had previously sold the calls to earn income on that position . He or she is now closing that position and rolling it forward by three months, gaining additional $0.20 in the process.

Alternatively, it could be a short calendar spread . Both trades would be market-neutral strategies that profits from the passage of time rather than a directional move. (See our Education section)

HMA fell 3.28 percent to $7.96 and has been fluctuating in range since the summer of 2011. The hospital operator's stock has mostly remained below $8 during that time, which could be why the trader is targeting that level.

Total option volume is more than 15 times greater than average in the stock so far today.

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