What's behind puts in Cardinal Health

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Traders are positioning for a potential pullback in Cardinal Health, which is near its highest level in more than four years.

optionMONSTER's Depth Charge system detected the purchase of 11,050 April 45 puts, including a single print of 5,000, as premiums rose from $0.65 to $0.85 yesterday. These are clearly new positions, as the open interest in the strike was a mere 27 contracts before the session began.

The puts, which lock in the price where traders can sell CAH no matter it might fall, were not tied to any stock activity identified by our scanners yesterday. However, given how high the shares are trading, these options could well have been bought as a protective hedge on a long position established earlier. (See our Education section)

CAH ended yesterday's session up fractionally at $46.28. The health-care services company has been trading sideways since hitting a 52-week high of $46.87 on Feb. 19, which is also at a resistance level that goes back to October 2008.

Total option volume in the name was more than 15,000 contracts yesterday, compared with a daily average of just 1,074 in the last month. Puts outnumbered calls by nearly 13 to 1.


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