By Chris McKhann
Option traders are betting that shares of WellPoint (WLP) will not soon recover the highs of a month ago.
The health benefits company has fallen more than 13 percent in the last month. WLP had run to its 52-week peak of $70 on Jan. 20--its highest level since March 2008--before beginning a shar descent. Today WLP trades at 59.86, up 1.46 percent after again finding support at $58.50 over the last week.
One large institutional trader sold 10,000 of the June 62.50 calls for $2.75. The previous open interest was 1,705 contracts, so this was a new opening position.
This call selling was likely done against stock either as a covered call against existing shares or as a delta-neutral trade against a smaller number of shares. The covered call is moderately bullish, while the delta position is looking for shares to stay in a range. (See our Education section)
(Chart courtesy of tradeMONSTER)