CVS Puts Pop Ahead of Congress Appearance

The April 50 put has seen heavy trading

Managing Editor
Mar 27, 2019 at 3:20 PM
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Drugstore name CVS Health Corp (NYSE:CVS) is lower with Centene (CNC) today, after the latter announced its plan to acquire WellCare Health (WCG) for an estimated $17.3 billion. CVS is also scheduled to appear before congress next week -- alongside major pharmaceutical names -- to discuss high prescription drug prices.

At last check, CVS Health stock is down 2.8% at $53.85 in afternoon trading -- and one of the worst performers on the New York Stock Exchange (NYSE). CVS has fallen 15% year-to-date, and is eerily close to its early March lows. This past week, the 20-day moving average has been pushing the shares even lower, and now put options traders have been flocking toward the drugstore chain. 

Digging deeper, puts are going at three times the expected pace, with more than 47,000 already crossing the tape today. The April 50 put is the most active, where 26,805 contracts have traded hands. In other terms, these traders may expect CVS stock to fall below $50 by or before its expiration on Thursday, April 18. Making this activity even more notable is the fact that call buying has by far been the more popular strategy in recent weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

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