Bulls Ride Medtronic Momentum

By Mike Yamamoto of OptionMonster
 
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.

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.

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