Shares of healthcare REIT Healthpeak Properties (PEAK) have been trending in a range for the past few months. One trader sees shares moving to the higher end of their range, and possibly breaking to new highs.
That’s based on the April $37 calls. With 85 days until expiration, 9,500 contracts traded hands, a 91-fold jump in volume compared to the prior interest of 104. The buyer of the calls paid $1.05 to make the trade.
With shares around $36, the option is just $1.00 out-of-the-money, and trading right at $1.05 makes the option inexpensive relative to any premium paid. However, shares have a 52-week high of just $37.
The healthcare REIT is up about in-line with the overall stock market in the past year, abut has a massive 33 percent profit margin and double-digit earnings growth.
Action to take: Investors may like shares here, as they have a starting yield of 3.3 percent. However, the company has had to make a slight reduction in the dividend in the past year, down from 3.5 percent.
Traders may be able to grab some mid-double-digit profits on the April calls, given that shares are in a short-term uptrend. However, once shares get near $37, they’re likely to encounter some resistance, so traders may want to take profits quickly when that price target hits.
Disclosure: The author of this article has no position in the company mentioned here, and does not intend to trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.