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Bulls return to Health Management

David Russell (david.russell@optionmonster.com)

Health Management Associates rallied hard in the first quarter, and the bulls came back to the hospital operator on Friday.

optionMONSTER's Heat Seeker program detected the purchase of almost 4,500 June 14 calls in volume far above the strike's previous open interest of just 22 contracts. Premiums rose from $0.50 to $0.80, which shows the strong buying interest.

Long calls such as these lock in the price where shares can be purchased, so they can generate significant leverage if the stock rallies. Their cheap entry price also helps investors manage risk. (See our Education section)

HMA rose 6.24 to a new record closing high of $13.79 on Friday. The stock spent two months consolidating after its big move early in the year, then found support at its 100-day moving and started running again last week.

Overall option volume in the name was 37 times greater than average in the session. Calls accounted for a bullish three-quarters of the total.

(A version of this post appeared on InsideOptions Pro on Friday.)

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