Traders are positioning for a rebound in Baxter after the medical device maker gapped lower last week on disappointing earnings results and a lowered outlook.
Option activity was concentrated yesterday at the June 50 strike, where 7,449 calls changed hands against open interest of 3,768 contracts. Most of the calls, which had an average volume of just 238 per day for the last month, traded in a strong buying pattern for $0.90 to $1.15, according to OptionMonster's tracking systems.
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Baxter closed yesterday up 0.69 percent to $48.22. Shares had been trading near $60 just last week but gapped below $50 after the company reported slower-than-expected sales of plasma-based drugs and charges related to health care reform.
The name was downgraded by JP Morgan and William Blair in the days following those results, but shares apparently have found some footing near the $47-$48 area. The stock would need to gain roughly 6 percent for the calls purchased yesterday to turn a profit.
The volatility is on the lower end, and overall calls at all strikes outnumbered puts by more than 5 to 1.
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Disclosure:
Najarian owns BAX long calls
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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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