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Boston Scientific Corporation (NYSE:BSX) has recovered some of its losses from yesterday, up 1.9% at last check to trade at $11.40. Strengthening the shares is news that an advisory panel to the Food and Drug Administration (FDA) approved BSX's stroke-preventing Watchman device. These technical and fundamental developments are having a pronounced effect in the company's options pits, where overall volume is running at 14 times the normal pace.
Most active by a mile is the February 2014 13-strike call. More than 43,000 contracts -- including a block of 20,000 -- have traded at the strike, with the majority crossing at the ask price, suggesting they were purchased. Implied volatility is on the rise, and volume outstrips open interest at the strike, pointing to the creation of newly bought bullish bets.
In order for today's traders to profit, they need BSX shares to muscle their way past $13 by the closing bell on Feb. 21, 2014, when the options expire. That represents a sizable 14% advance from the stock's current position. No matter what happens during the next two-plus months, however, the most the speculators can lose is the initial premium paid.
Today's preference for short-term calls over puts is business as usual for Boston Scientific Corporation (NYSE:BSX). Schaeffer's put/call open interest ratio (SOIR) for the medical device company checks in at 0.46, which means calls more than double puts among options expiring in three months or less. Also, the SOIR ranks lower than 83% of similar readings from the past year, suggesting near-term speculators have rarely been as inclined toward calls (relative to puts) as they are now.