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Bull sticks with Humana before report

Mike Yamamoto (mike.yamamoto@optionmonster.com)

At least one trader apparently believes that Humana will turn in a positive earnings report next week.

The trader sold 2,250 July 85 calls for $3.74 and bought the same number of August 85 calls for $5.06 on Friday, according to optionMONSTER's Heat Seeker real-time tracking system. Volume was below open interest in the July options, which expired at the end of last week, but above it in the August strike.

He or she is paying a net $1.32 to roll a long-call position forward, buying another month for the stock to rally. But these options, which will track the share price closely because they are well in the money , will quickly lose value if the stock fails to rise by expiration in mid-August. (See our Education section)

HUM rose 0.84 percent on Friday to close at $89.08. The health-care company, which will release second-quarter results on the morning of July 31, has been trending higher since hitting support at the $72 in mid-April.

Total option volume in the name topped 6,200 contracts on Friday, 5 times its daily average for the last month. Overall calls outnumbered puts by more than 13 to 1.

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