Health Insurance Stock Adds to Huge Gains; FLEX Bulls Win

Levels of put buying were elevated on EHTH and FLEX before earnings

Jul 26, 2019 at 2:37 PM
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The S&P 500 hit a record high today thanks to strong corporate earnings. Two names to monitor in today's trading are online health insurance service eHealth, Inc. (NASDAQ:EHTH) and logistics technology expert Flex Ltd (NASDAQ:FLEX). Here's latest on the shares of EHTH and FLEX.

Analysts See More Upside For eHealth Stock

EHTH shares keep roaring higher, last seen up 26.5% at $108.68, and earlier they touched a record high of $110.89. The company posted a surprise profit for the second quarter, and also gave a strong outlook for its fiscal year. Several positive analyst updates have come through, with Jefferies saying the company can exceed $1 billion in revenue in about four years and raising its price target to $96 from $71. eHealth received its highest price target from Cantor Fitzgerald at $120.

Traders were relying on puts before today, though that may partially be from shareholders protecting paper profits with options since the shares have surged 384% in the past year. Almost four long puts crossed for every call in the past 10 days at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), and the put-heavy Schaeffer's put/call open interest ratio (SOIR) of 1.78 ranks in the top quartile of its annual range. At the same time, peak open interest is at the August 100 call.

Flex Call Traders Take Profits

FLEX shares are also jumping today, up 12.4% at $11.18, thanks to the company's profit outlook and comments that it's streamlining the restructuring process. The upside comes even though Flex has found itself right in the middle of the ongoing Huawei drama, with reports suggesting the Chinese company has cut Flex from its supply chain. But while the price action looks great on the surface, the stock is now testing its 320-day moving average and the site of its bear gap from October, suggesting chart resistance could be in play.

Options traders at the ISE, CBOE, and PHLX were also picking up puts on Flex at a rapid pace, with the 10-day put/call volume ratio of 1.89 ranking in the 87th annual percentile. On the call side, however, there was interesting open interest at the weekly 8/2 10-strike call, suggesting that some traders may notched impressive profits following today's move. This contract is actually the most popular in today's trading, and sure enough it appears speculators are closing positions.

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