Healthcare facility firm
Acadia Healthcare Company (ACHC) is down 24% over the past year, amid slow health spending. One trader sees shares soaring higher into early next year.
That’s based on the January 2025 $75 calls. With 99 days until expiration, 10,004 contracts traded compared to a prior open interest of 121, for an 83-fold rise in volume on the trade. The buyer of the calls paid $0.75 to make the bullish bet.
Acadia shares recently traded for about $55, so they would need to rise by $20, or 36%, for the option to move in-the-money. The strike price of the option is well under the stock’s 52-week high of $87.77.
Operationally, Acadia has held up better than its share price. Both earnings and revenues are up 8% over the past year. And shares trade at a reasonable 14 times earnings.
Action to take: Shares recently dropped lower on news of a federal investigation into the company’s facilities. For now, long-term investors may want to hold off on buying until the all-clear has been sounded.
For traders, shares have gotten heavily oversold following the news and could be in a position to bounce higher over the coming weeks. That could mean a high double-digit return or better on the January 2025 calls. Traders should look to take a quick profit on the trade.
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.
