Medtronic (MDT, news, chart, volatility) options volume is running three times the usual, with 15,000 calls and 1,000 puts trading on the day. The January (2010) 45 and 60 calls are the most actives on possible bullish spread trading. For example, with the stock down $1.09 to $42.45 midday, 2,500 January 40 calls traded offeside for $6.40 and 2,500 January 60 calls hit bidside for $2.00. The trade was repeated several times until the volume in both reached 6,460 contracts, easily exceeding the existing open interest. In this case, the strategist appears to hold a bullish view on the medical device maker and paid $4.40 to open the srpead. The potential is $10.60 if MDT rallies to $60 or more by January 2010 options expiration.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.