One big investor thinks that the fireworks are done in HCA Holdings.
optionMONSTER's tracking systems detected the sale of 10,000 June 29 puts for $2.55 and 10,000 June 29 calls for $2.70. There was barely any open interest in either strike before the activity appeared, so this is a new position.
Known as a short straddle , the trade generated a credit of $5.25, which the investor will keep if HCA closes at $29 on expiration. The gains will erode on either side of that level, turning to losses below $23.75 and above $34.25.
HCA rose 1.48 percent to $28.82 yesterday and is up 29 percent in the last month. The hospital operator was the target of bullish call buying on Jan. 13 that was followed by a steady push higher in the next few weeks, and those contracts have more than doubled in value.
The most recent pop came on Monday, when the company reported better-than-expected fourth-quarter earnings and announced a $2 special dividend.
Given that it has already made a big move, some traders may think that HCA will now shuffle sideways as its gains are consolidated. (See our Education section for more on market-neutral strategies that make money from the passage of time rather than a directional move.)
The short straddle pushed overall option volume in the name to 9 times greater than average in yesterday's session.
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