CVS Health (CVS) Bulls Smile on Omnicare Deal

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

May 21, 2015 at 2:24 PM
facebook twitter linkedin

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. 


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners