WellPoint bull ups ante before earnings

optionMONSTER

One trader is getting more bullish on WellPoint before its earnings report tomorrow morning.

optionMONSTER's Heat Seeker system detected the sale of 3,002 September 80 calls for $7.51 and the purchase of 3,002 September 90 calls for $1.58. Volume was below the previous open interest in the 80s but above it in the 90s, indicating that a position is being rolled to a higher strike.

The trader is apparently taking profits from the lower-strike calls and applying some of the proceeds to the higher-strike options, looking for even more gains. The new long calls are betting that WLP will rally above $90 by expiration in mid-August, but they will expire worthless if the stock remains below that level. (See our Education section)

WLP is down 0.3 percent to $86.74 this morning, ahead of its second-quarter report at 8:30 a.m. tomorrow. The health-benefits company hit $87.56 early in the session, its highest price since January 2008, the same month that shares reached their all-time high of $90.

Total option volume in the name already tops 11,200 contracts today, 7 times its daily average for the last month. Overall calls outnumbered puts by more than 11 to 1.


More From optionMONSTER

Rates

View Comments