CVS Health (CVS) Bulls Smile on Omnicare Deal

CVS Health Corp (NYSE:CVS) calls are changing hands at twice the expected intraday rate

by Josh Selway

Published on May 21, 2015 at 2:24 PM
Updated on Jul 13, 2020 at 2:31 PM

Put buying has been nearing an annual-high pace in CVS Health Corp's (NYSE:CVS) options pits in recent weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) reveals more than two puts have been bought to open for every call during the past two weeks. Furthermore, the resultant 10-day put/call volume ratio of 2.23 is only 2 percentage points from an annual bearish peak.

It's a different set-up today, however, after the company announced the purchase of Omnicare, Inc. (NYSE:OCR) for nearly $13 billion. Now, it's calls that are seeing heavy action, changing hands at twice the expected intraday pace. There's a chance traders are buying to open the June 105 call -- CVS' most active strike -- betting on the shares to topple $105 before front-month options expire at the close of Friday, June 19. 

Since a brief foray above $105 in late March -- en route to a record high of $105.46 -- CVS has been consolidating in the $98-$105 range. CVS Health Corp (NYSE:CVS) topped out at $104.93 today, and at last check, the shares were 3.2% higher at $104.49. 


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