Natus Medical is up over 5% percent yesterday on a strong move following a conference call announcing an upward revision in the Q4 2013 revenue guidance. BABY had a good beat of Q3 earnings based on growth in their neurology and newborn care divisions. The stock has rallied over 40% since October and is showing incredible strength despite disclosures of insider selling in the name. BABY options are not traded with a large amount of volume, however there is a relatively large position open in the July $30 calls. This looks to be a rather large speculator seeing as these options are not cheap. Today’s move is impressive given the large amount of volume. It is on pace to at least double the daily average.
There was news in the name yesterday but a large share of the recent move has occurred with little to no headlines. This could signify some unknown positives in the name. Couple the move with the large open interest in the July calls and we could be looking at an excellent trading opportunity. Here we will look
Trade: Buy the BABY July 30 Calls for $3.10
Risk: $310 per 1 lot
Reward: Unlimited
Breakeven: $33.10