Bulls Seek Quick Pops in Ventas, HCP

By David Russell, reporter at OptionMonster

NEW YORK -- Nursing-home stocks have been pulling back and on Monday buyers stepped in.

OptionMonsters's tracking programs detected a surge of call-buying in Ventas (VTR)and HCP (HCP), real-estate investment trusts that focus on senior housing and residential health-care properties.

Ventas was active first, with 5,000 November 65s purchased for 20 cents to 25 cents. Minutes later, HCP's November 45 calls traded 5,000 times for 15 cents and 20 cents. Volume surpassed open interest in both, indicating that new positions were initiated.

Calls lock in the price investors must pay to buy shares, so they can generate leverage when stocks rally. The noteworthy thing about Monday's activity is that the transactions occurred in contracts that were close to the money and that expire at the end of next week. That indicates traders are looking for a move in the short term.

Shares of Ventas fell 1.5% to $63.23, and HCP shed 0.91% to close at $43.49. Both have been trending higher since late 2008 but have lagged in recent months. That could be leading some chart-watchers to believe that the stocks are now at attractive entry points.

Overall option volume was more than 17 times greater than average in both companies, with calls outnumbering puts by more than 100 to 1.

Russell has no positions in VTR or HCP.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.