Unusual Options Activity: Teladoc Health (TDOC)

Shares of remote healthcare consultation company Teladoc Health (TDOC) have been in a steady downtrend over the past year. One trader sees that trend reversing with a rally in the coming weeks.

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  • That’s based on the May $75 calls. With 45 days until expiration, 2,657 contracts traded compared to a prior open interest of 106, for a 25-fold increase in volume on the trade. The buyer of the calls paid $7.00 to get into the position.

    With shares just under $74, they would need to rise less than 5 percent in the next 6 weeks for the option trade to move in-the-money. The strike price is also far under the company’s 52-week high of $194.99, making for an attractive buy now.

    The stock isn’t just down 60 percent over the past year thanks to the end of the pandemic. Profit margins have gone negative, as the company has managed to lose a fair amount of money, even as revenues have risen by nearly 45 percent in the past year.

    Action to take: Shares look like an interesting rebound play. Rising revenue and long-term trends for the company look attractive. And the company has a strong balance sheet, with ample cash relative to its debt to weather the storm.

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  • Traders may like the may calls, as shares can likely rebound in the coming weeks for some decent profits. Traders can likely nab mid-to-high double-digit gains in the coming weeks, and should look to take profits rather than get exercised as the option moves in-the-money.


    Disclosure: The author of this article has no position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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