CareFusion has run higher in the last week, and traders are looking for even more gains in the health-care products and services company.
More than 5,300 July 40 calls traded in a strong buying pattern today as premiums rose from $0.75 to $1, according to optionMONSTER's Heat Seeker tracking system. The volume was far above the strike's open interest of just 262 contracts, indicating that these are new positions.
CFN is down 0.32 percent to $37.34 in early afternoon trading. The stock fell after the last earnings report on May 9 but has risen sharply since the end of the month on reports that it might be in talks to acquire the medical division of U.K.-based engineering company Smiths Group. CareFusion is scheduled to present at the Goldman Sachs Healthcare Conference on Tuesday.
Today's long calls are looking for CFN to gain roughly 10 percent or more by mid-July. These contracts lock in the price where traders can buy the stock no matter how far it might rise, but they could expire worthless if shares remain below the $40 strike price.
Total option volume in the name tops 6,100 contracts so far today, more than triple its daily average for the last month. Only 222 puts have changed hands in the session, a reflection of the bullish sentiment.
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