Conmed has pulled back after a big rally, and traders apparently think that it's ready to come back to life.
optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,000 August 45 calls for $2.30 and the sale of 2,000 August 50 calls for $0.70. There was barely any open interest at either strike, which indicates that new positions were initiated in a vertical spread .
The investor stands to collect $5 if the medical-device maker closes at $50 or higher on expiration. The trader paid $1.60 for that right, which could translate to a gain of more than 200 percent from the stock advancing less than 15 percent. (See our Education section for more on the leveraging potential of options.)
CNMD rose 1.87 percent to $44.07 yesterday. The stock surged from $28 to $49 between the start of 2013 and mid-February, then rolled over and followed the broader health-care sector lower. But now it's making a higher low than the area where it bounced two months ago near its 100-day moving average. That could make some chart watchers think that the momentum remains bullish.
Overall option volume in the name was more than 2,000 times average yesterday, with calls accounting for a bullish 88 percent of the total.
CNMD will report first-quarter results before the opening bell on April 22.
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