CVS – CVS Caremark Corp. – Optimistic options players are positioning for a rebound in the value of CVS’s shares by July expiration despite yesterday’s announcement by Walgreen Co. that it will no longer participate in CVS Caremark’s pharmacy networks plan. CVS Caremark Corp.’s shares were up slightly in the first hour of the trading session, but slipped 0.25% to stand at $30.96 as of 11:02 am (ET). Investors itching for a near-term rebound in the price of the underlying stock purchased approximately 4,000 calls at the July $32 strike for an average premium of $1.07 apiece. Call-buyers are prepared to accrue profits if CVS’s shares rally 6.80% over the current price of $30.96 to surpass the average breakeven price on the calls at $33.07 by June expiration day.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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