DGX Gains on Q3 Beat, Raised Guidance

Calls are taking off in the options pits

Assistant Editor
Oct 22, 2020 at 11:23 AM
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The shares of Quest Diagnostics Inc (NYSE:DGX) are up 2% at $125.32 at last check, after announcing third-quarter earnings and revenue above analyst expectations. Furthermore, the company raised its full-year guidance due the high demand for COVID-19 testing. To follow, Credit Suisse raised its price target to $135 from $130. 

Today's pop has DGX trading at its highest level since early August. Steadily climbing on the charts, the stock's early-October pullback was caught by the 150-day moving average. Now, the equity is on track for its fourth-straight weekly win, up 17.3% year-to-date. 

The brokerage bunch is looking bullish on the healthcare stock, with nine of the 14 analysts in coverage sporting a "buy" or better rating, while the remaining four linger at a tepid "hold," and not a "sell" in sight. 

The options pits are of similar sentiment, per DGX's 10-day call/put volume ratio of 13.64 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 82% of readings from the past year, revealing a stronger-than-usual penchant for calls in the past two weeks. 

Today is more of the same, albeit with much higher volume after the positive news. So far, 1,886 calls have crossed the tape, which is six times what's typically seen at this point and pacing for the 98th percentile of its annual range. The five most popular options are November calls, with traders circling the 125 call the most. 

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