Community Health Systems, Inc. (CYH) is an operator of healthcare facilities in the U.S. The company’s stock is currently trading around $35.45 in a 52 week range of $35.36-$51.29. The stock has been massively under-performing the market and has made new 52 week lows during today’s trading session. As the stock makes new lows we are seeing large put buyers in CYH. Earlier in the session a trader bought 6,652 CYH May 39 puts for $4.66. Now a total of 10,000 contracts have traded on that line and today’s volume will create the largest line of open interest in any contract in May expiration. These are extremely bearish bets that indicate the high level of bearish conviction this trader has in CYH. The stock is trading well below the Ichimoku Cloud and the future cloud is sharply downward sloping. With a weak chart and bearish order flow we believe that CYH is signaling for a short position.
Trade: Buying the CYH Apr 34 Puts for $0.95
Risk: $95 per 1 lot
Breakeven: $33.05
Andrew Keene
http://keeneonthemarket.com
