Option Bulls Are Looking for Stryker to Leg Higher

Bulls are looking for Stryker to leg higher.

OptionMonster's real-time systems detected the purchase of about 2,700 January 48 calls for $1.20 to $1.60, compared with previous open interest of just 723 contracts.

These long calls lock in the entry price investors must pay to buy shares in the company, which makes replacement hips and knees. That means they can so can double or triple from even a modest appreciation in the stock price. With that leverage comes risk, however, because the options will become worthless if the stock is below $48 on expiration.

Stryker rose 1.76 percent to $48.60 yesterday and has been trying to base out around $46 after dropping along with the rest of the market over the summer. Its last earnings report on Oct. 19 beat estimates and management raised guidance, but the shares have been struggling to break above their 100-day moving average.

Overall option volume was 5 times greater than average yesterday, with calls outnumbering puts by 6 to 1.

—Russell has no positions in SYK.

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David Russell is a reporter and writer for OptionMonster.