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Bulls Bet on Rally in Quality Systems

Tuesday, 8 Nov 2011 | 7:25 AM ET

Quality Systems started Monday with a bang, with upside options red hot out of the gate.

Traders aggressively purchased the December 45 calls for 50 cents to 60 cents and the December 47.50 calls for 34 cents to 40 cents, according to OptionMonster's real-time tracking systems. More than 5,000 of the 47.50s traded, and nearly 1,700 of the 45s changed hands.

Long calls lock in the price where investors can enter a stock, so they tend to rise much faster than the shares when a rally occurs. They can double or triple in a hurry if the underlying name moves 10 percent or 15 percent.

The stock fell 1.76 percent to $39.11 yesterday after opening strong. The health-care information systems company received an upgrade from Avondale at the end of October and has an analyst day scheduled this week in New York. It's also been on Forbes' list of 100 best small companies for 11 straight years.

Almost 10,000 options traded overall in the name yesterday, compared with average volume of fewer than 1,000. Calls outnumbered puts by 14 to 1.

—Najarian has no positions in QSII.

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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.

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