Medical product supplier Avantor (AVTR) is down 7% over the past year, with shares seeing some big rallies and pullbacks. One trader is betting the next rally will occur over the months ahead.
That’s based on the May 2025 $26 calls. With 134 days until expiration, 2,978 contracts traded compared to a prior open interest of 103, for a 29-fold rise in volume on the trade. The buyer of the calls paid $0.55 to make the bullish bet.
Avantor shares recently traded for about $21.50, so the stock would need to rise by $4.50, or about 21%, for the option to move in-the-money. That’s well within the stock’s trading range, given its 52-week high of $28.00.
Operationally, Avantor has had a poor year, with earnings dropping nearly 50% amid flat revenue growth. That’s pushed shares up to 48 times earnings, although forward earnings estimates are closer to 20 times earnings.
Action to take: Shares look oversold at current levels and are due for a bounce. Shares have traded within a range over the past year and now trade closer to the lower end of that range.
For traders, the May $26 calls are likely the best way to play a possible bounce in shares over the weeks ahead. The options can likely see mid-double-digit returns on such a rally.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.