Takeover Rumor Spurs Hologic: Options

By Jud Pyle, CFA, chief investment strategist for the Options News Network

CHICAGO (TheStreet) -- Although Hologic(HOLX Quote) did not announce any significant news Monday, at least one investor is taking a bullish stance on the diagnostic equipment maker and boosting call volume.

This type of call activity looks similar to other option activity we have seen in the past few weeks in the health care sector, as some investors speculate on potential merger-and-acquisition activity.

The slightly out-of-the-money September 17.50 calls changed hands more than 11,900 times today and are home to current open interest of 4,021 contracts. These calls are up 28 cents on the day. HOLX shares closed the day up 39 cents to $17.46.

The September 17.50 calls have a delta of less than 50, meaning for every dollar move in the underlying, these options should move by less than 50 cents. That means these calls should have moved around 20 cents, but call buying activity pushed their prices even higher.

Elsewhere in HOLX, more than 9,300 of the October 20 calls changed hands versus open interest of just 20 contracts. These calls finished the day up 25 cents to 33 cents. This was also a move that was greater than would be expected considering the delta of the calls.

Normal daily option volume in HOLX is approximately 3,000 contracts, but today's activity managed to far eclipse that figure. On the day, more than 28,000 contracts across all strikes hit the tape today.