Bullish Options Activity In Boston Scientific (BSX)
Boston Scientific (NYSE: BSX) announced today that they were halting the sale of cardiac defibrillators because the company failed to submit two changes to the manufacturing process for FDA approval. The shares were hit hard in the wake of this announcement, losing 12.6% to close at $6.80. The stock's 52 week low is in sight, at $6.31.
Despite the bearish news and the sell off in the stock, options traders placed large bets that the company would recover from the setback. By the end of the day, traders had picked up 103,000 BSX call options versus only 41,000 puts. A majority of the action took place in the long dated Jan 2011 $7.50 calls. Investors paid 90 cents per contract and will profit if BSX closes above $8.40 before expiration.
One person who is likely hoping that these bullish options bets pay off is respected value manager David Einhorn, who runs Greenlight Capital. As of its last SEC filing in February, Greenlight owned nearly $300 million in BSX shares, making it the fund's largest holding at 10.5% of its long equity portfolio. Needless to say, it must have been a pretty rough day for Einhorn and Greenlight. Another of the hedge fund's holdings, Aspen Insurance (NYSE: AHL), has fallen 3.13% in the after hours this evening. Knowing Einhorn's reputation for diligence, it may be a very late night at Greenlight's Manhattan offices.
