The spread will be a winner if EVHC moves above 23.55 or better and has a payoff ratio of about 1 to 1.5.
Envision Healthcare Holdings Corp., trading 21.45 with an IV30 of 84.90 and an HV10 of 41.75, saw a large call spread trade.? The stock, with an ADV of 1190 contracts and OI of 51,000, saw a customer buy the May 22.5 calls 12,000 times with the biggest block being 10,000 for 1.50.? Against it, he or she sold 12,000 of the May 25 calls with the biggest block being 10,000 of the calls at .45.? Net, the trader bought the May 22.5/25 call spread for 1.00 and 1.05.
The customer clearly thinks EVHC could rally between now and May expiration.? Additionally the company has earnings on May 5, which could be a driver of this spread.? The spread will be a winner if EVHC moves above 23.55 or better and has a payoff ratio of about 1 to 1.5
This trade should be considered bullish the underlying and mildly bullish volatility.