IB Options Brief: Tenet Healthcare Corp. (THC) & Lincare Holdings Inc. (LNCR)
THC ñ Tenet Healthcare Corp.
A large block of call options purchased on health care services provider, Tenet Healthcare Corp., this morning suggests one strategist may be positioning for shares in the name to extend recent gains. Shares in THC received a boost earlier in the week on positive comments from Citigroup analysts regarding U.S. hospital stocks prior to a Supreme Court decision on the healthcare reform law.
THC, which was raised to ëBuyí from ëSellí with an increased share price target of $6.00 from $4.00 at Citi on Monday, extended gains today. The stock is currently up 1.5% to stand at $4.68 as of 11:20 a.m. in New York.
The single largest trade in Tenet Healthcare options today was the purchase of a block of 14,259 calls at the July $5.0 strike for a premium of $0.30 apiece. Volume in the position is greater than the overall number of open contracts on THC given open interest of 13,707 contracts on the stock. The strategist initiating the trade stands prepared to profit in the event the price of the underlying shares rally another 13.25% to surpass the effective breakeven price of $5.30 by July expiration.
LNCR ñ Lincare Holdings Inc.
Shares in the provider of health care products and services are moving higher again today on heavy volume. The stock is up 3.0% just before midday in New York to arrive at $25.65 and have gained more than 15.0% since the end of last week.
Traders positioning for shares in Lincare to continue to climb snapped up around 1,300 in-the-money calls at the July $25 strike for an average premium of $1.22 apiece. Call buyers profit at expiration as long as shares in the name increase another 2.2% to surpass the average breakeven price of $26.22.
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