Express Scripts (ESRX), which rallied 5.4 percent yesterday after the company announced plans to acquire Medco (MHS), is up another $1.46 to $56.81. A noteworthy recent options trade in ESRX is a four way spread, in which the strategist sold Jan13 40 – 42 “stupid” put spreads at $4.20 (sold both legs), 5000X, to buy the Jan13 60 – 70 call spread at $3.50, 10000X. All four legs of the spread look opening and the position seems to be a bullish play in anticipation of a move beyond $60 in ESRX shares through 2013. 30,000 calls and 12,000 puts now traded in the name. MHS is seeing action as well. Shares are up $2.17 to $66 and Oct 52.5 puts are the most actives. 4,508 traded. There’s some doubt about the deal clearing anti-trust hurdles. For that reason, perhaps, MHS closed Thursday almost $10 below the proposed takeover offer.
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.