NEW YORK -- Medtronic
(MDT) has been rebounding all month, and traders are betting that the upside momentum will continue.
OptionMonster's tracking programs detected the purchase of about 12,000 May 60 calls Thursday, most of which priced for 87 cents to 99 cents. Volume was more than triple the strike's previous open interest of 3,661 contracts, indicating that new money was put to work on the long side.
These calls lock in the price where the stock can be bought through mid-May, letting investors cheaply position for a move higher. The contracts can also generate significant leverage in a rally but will expire worthless if shares remain below $60.
Medtronic shares rose 0.85% to $58.30 Thursday and are up more than 9% since hitting a four-month low of $53.33 on Feb. 4. The stock initially fell after quarterly results on Feb. 18 but then resumed its climb. Management is scheduled to present at the Cowen Healthcare Conference on Wednesday.
Overall option volume in the name Thursday was seven times its daily average for the last month. Overall calls accounted for a bullish 87% of the total.
Yamamoto has no positions in MDT.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts