Shares of medication manufacturer Baxter International (NYSE: BAX, Stock Forum) have hovered around $48 after a major sell-off on Feb. 27. Big option volume yesterday suggested that at least one investor could be betting BAX stock will climb higher than 52 at November expiration.
In midday trading, an investor bought 8,000 Nov. 52.5 calls for around $2.32 and sold 8,000 Nov. 60 calls for about 55 cents with the stock around $49. That means this investor paid $1.77 for this trade. This investor also sold 8,000 Nov. 42.5 puts at $1.70. After paying $1.77 for the call spread and collecting about $1.70 on the puts, the customer paid 7.5 cents in total for the trades. The Nov. 42.5 puts are home to current open interest of 180. The current open interest of the Nov. 52 calls is 175 while the current open interest of the Nov. 60 calls is 423.
An interesting thing to keep in mind is BAX stock seems to have found a range. These shares dropped down to around $50 from the $60-level in February. On April 6, BAX shares bottomed out at $47.21, but also sank to $48.57 on March 11 and $48.07 on April 24. BAX stock also hasn’t climbed higher than $55 since Feb. 24. BAX shares are currently down 10 cents to $48.59.
Normal daily volume for BAX options is around 5,400. More than 25,000 BAX options changed hands during the first half of the trading yesterday. News that BAX, along with other vaccine providers Roche (ROG), Sanofi-Aventis (SASY), Novartis (NOVN) and GlaxoSmithKline (GSK), have plans to produce an injection that protects people against the HINI flu strain could have boosted volume and sparked confidence in at least one bullish investor.