Medtronic traders show no fear

David Russell (
June 5, 2014

Medtronic is down today, but traders don't expect the drop will be sustained.

optionMONSTER's tracking programs detected the sale of more about 4,300 June 62.50 puts for $1.12 to $1.20. Roughly the same number of June 60 puts were bought at the same time for $0.35 in volume below open interest in that strike. This suggests that an existing short position was closed and rolled to the higher strike.

The investor probably sold the June 60s when MDT was lower, looking to earn premium on a hunch that the medical-device maker would hold its ground. Now that it's advanced and premiums have dropped, he or she bought them back and sold the 62.50s. The trader netted about $0.80 of additional income while raising the level at which he or she must sell the stock by $2.50. (See our Education section)

MDT is down 2.02 percent to $61.94 in afternoon trading. It surged almost 4 percent yesterday after Bloomberg reported that it might buy London-based Smith & Nephew and move overseas to lower its tax burden. It pulled back today after the analyst at Wells Fargo said the deal was unlikely.

Total option volume in MDT is 5 times greater than average so far today.

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