Bulls Seek More Upside in Varian

By David Russell, reporter at OptionMonster

NEW YORK -- Varian Medical Systems ( VAR) gapped higher and now the bulls are hunting for more gains.

OptionMonster's data-mining systems detected the purchase of about 3,200 November 70 calls, most of which priced for 70 cents and 87 cents. Volume was six times the open interest in the beginning of the day, indicating that new money was being put to work.

The investor has locked in an entry price of $70 to buy stock in the company, which makes radiation equipment used to treat cancer and build X-ray machines. Those options will generate nice leverage if the stock continues to rally through that level. If it doesn't, however, the calls will expire worthless.

Varian's shares rose 3.01% to $68.77 Thursday and are up 20% in the last week. Most of that move came on last Friday after earnings of $1.08 per share beat the $1.03 consensus estimate. Revenue guidance was also significantly better than expected as the company gains customers overseas.

Total option volume was seven times greater than average in the name, with calls accounting for more than three-quarters of all contracts.

Russell has no positions in VAR.
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