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



) -- Newly traded

Cardinal Health

(CAH) - Get Report

spurred some bullish options activity Wednesday.

Cardinal Health

, which recently completed a spinoff to shareholders of



, began trading on its own on Sept. 1 without CFN shares.

A customer initially bought the Oct. 25 calls 15,000 times today, and then turned around to sell 15,000 of the older Sept. 35 calls, which also called for the delivery of half a share of CFN. The customer sold the Sept. 35 calls for around $1.75, and paid about $2.57 for the October calls.

The simplest explanation for this trade is the investor sold to close the Sept. 35 calls and rolled out for exposure in the October calls. The open interest in the Sept. 35 calls is currently 19,079 contracts, which is why it is quite possible that that this customer is selling to close.

On some price charts, it may appear that CAH has fallen in the past week, from the mid-$30's, to the high-$20's. But that is the result of receiving 50 shares of CFN for every 100 shares of CAH held. Half of the current CFN price is roughly $9.30. When you add that to the current CAH price of $27, you get a price of $36.30.

Bullish rolls like these do not mean that investors should run right out and buy CAH shares. However, it is interesting to note that one investor is rolling out a bullish play, and is betting on the earnings power of CAH alone rather than holding the options that have both CFN and CAH exposure. The investor needs CAH to perform on its own earnings power.

-- Written by Judd Pyle in Chicago

Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."