Tenet Healthcare has pulled back from recent highs along with the rest of the health-care sector, but one large trader is apparently looking for a positive earnings report next month.
optionMONSTER's Heat Seeker system detected the purchase of 5,000 May 50 calls in one print for the ask price of $1.75 yesterday. Open interest in the strike was just 1,343 contracts before the trade appeared, showing that it is a new position.
These long calls lock in the price where the stock can be purchased through mid-May no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $50. (See our Education section)
THC fell 1.45 percent to $48.79 yesterday. The hospital operator rebounded from the $42 level in at the start of February but hit resistance at its 200-day moving average around $52 early last week and has been pulling back since.
The company has not announced the date of its next quarterly release, but last year's calendar suggest that results will come out in early May, before yesterday's long calls expire.
Total option volume in Tenet topped 10,600 yesterday, more than 7 times its daily average for the last month. Only 612 of those contracts were puts.
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