Community Health Systems is attracting upside option buying ahead of an industry conference next week and earnings results later this month.
Although yesterday’s option activity wasn’t off the charts, it was clearly bullish and accelerated in the final hour of the session. About 2,500 March 21 calls traded in a strong buying pattern for $0.70 to $0.80, according to OptionMonster’s real-time tracking systems.
The volume well above the open interest of just 229 contracts coming into the session, so these were new positions. The total option tally in the name was 5 times its daily average, with calls outpacing puts by 11 to 1.
Community Health shares closed yesterday down fractionally at $19.85. The hospital operator’s stock has lifted off from the December lows near $16 and has moved up with the broader market.
For the calls purchased yesterday to turn a profit, the stock would need to gain roughly 10 percent before the options expire in mid-March.
The company will participate in the Leerink Swann 2012 Global Healthcare Conference scheduled for Feb. 15-16 in New York and then report fourth-quarter results on Feb. 21.
—Najarian has no positions in CYH.
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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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