OptionMonster's Heat Seeker system shows that about 3,000 May 77.50 calls expiring Friday were sold for 47 cents while the same number of June 80 calls were bought for $1.42 on Wednesday. Volume was below open interest in the shorter-dated contracts, which indicates a long position was rolled forward in time.
The trader is closing the May calls, which expire at the end of this week, and is opening a new position one month later at a higher strike for a net cost of 95 cents. Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential to generate significant leverage.
HCA ended Wednesday's session up 1.59% to $77.73. The hospital operator beat earnings and revenue estimates on May 5 thanks to higher admissions. Management also raised its outlook and announced a $500 million capital-expenditure plan.
Wednesday's overall volume in the name was quadruple its daily average for the last month, with calls accounting for a bullish two-thirds of the total.
-- Written by Mike Yamamoto of OptionMonster
Yamamoto has no positions in HCA.