Amedisys Shares, Options Volume Pop

AMED hit a record high after Baird applauded a CMS ruling

Nov 1, 2019 at 2:32 PM
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The shares of home health and hospice provider Amedisys Inc (NASDAQ:AMED) are soaring today, with at least one analyst applauding the recent Centers for Medicare & Medicaid Services (CMS) ruling. Specifically, Baird upgraded AMED stock to "outperform" from "neutral," and hiked its price target to $160 from $140, waxing optimistic on the CMS 2020 ruling for home health payments issued this week. As such, Amedisys options are popping off.

AMED stock is up 13.3% at $145.66, and earlier touched a new all-time high of $152.63. The equity is set to break out of its recent range, and finally topple the $140 level that's put a lid on rally attempts over the past year.

While absolute options volume isn't much to write home about, AMED has seen more than 900 call contracts change hands so far today -- roughly nine times its average daily call volume, and pacing for the 99th percentile of its annual range. For comparison, about 285 puts have crossed the tape, compared to AMED's average daily put volume of just 72 contracts.

Most popular is the November 150 call, which is seeing apparent buy-to-open activity. By purchasing the calls to open, the buyers expect Amedisys stock to rally north of $150 by the close on Friday, Nov. 15, when front-month options expire. Meanwhile, it appears option sellers are circling the December 160 call, opening new positions that will profit as long as AMED stays south of $160 through December options expiration.

AMED short sellers could be feeling the heat today. Short interest rose by 8.4% during the most recent reporting period, and now represents six sessions' worth of pent-up buying demand, at the stock's average pace of trading. However, short sellers could purchase out-of-the-money call options to hedge bearish positions.

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