Options: Baxter Vaccine News Excites

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

Shares of medication manufacturer Baxter(BAX Quote) have hovered around $48 after a major selloff on Feb. 27. Big option volume today suggests that at least one investor could be betting Baxter stock will climb higher than $52 at November expiration.

In mid-day 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 Baxter stock seems to have found a range. These shares dropped down to around $50 from the $60 level in February. On April 6, Baxter shares bottomed out at $47.21, but also sank to $48.57 on March 11 and $48.07 on April 24. Baxter stock also hasn't climbed higher than $55 since Feb. 24. Baxter shares are currently down 10 cents to $48.59. ...