CVS Caremark is running back toward recent highs, but one trader is looking for its shares to trade sideways.
CVS is up 0.25 percent to trade at $47.83. The pharmacy-services company has been climbing off support at $44 last tested in mid-September and is approaching the all-time high of $48.69 reached on July 18.
optionMONSTER's systems show that a trader sold 5,000 November 47 puts for $1 and the same number of November 48 calls for $1.20, both going for the bid prices. Volume in each strike was more than open interest at the start of the session, indicating that this is a new position.
This so-called short-strangle trade takes in a credit of $2.20 and can profit with the stock anywhere between $44.80 and $50.20 at expiration. The trader is betting that the shares will be range-bound and/or that the actual volatility will be less than that implied by the options. (See our Education section)
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