Traders apparently believe that Zimmer Biomet will report strong quarterly results at the end of this month.
optionMONSTER's Heat Seeker system identified the purchase of 10,000 August 115 calls for $2 to $2.30 yesterday. These are clearly new positions, as open interest in the strike was a mere 100 contracts before the trades occurred.
These long calls lock in the price where the stock can be purchased through mid-August 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 $115. (See our Education section)
ZBH slipped 0.05 percent to $109.23 yesterday. The company, which is the product of a $14 billion merger just completed between medical device manufacturers Zimmer and Biomet, began trading under its new ticker symbol this week. Earnings are scheduled to be announced on July 30.
Yesterday's call buying made up more than 99 percent of the option volume in the name, which usually trades just 118 contracts a day. Only 68 puts changed hands in the session.
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