HMS Holdings Corp. (NASDAQ:HMSY) – Shares in the provider of cost management services for government-sponsored health and human services programs are getting hammered today, plunging 27% earlier in the session to a four-year low of $19.66. The stock dropped after HMS Holdings Corp. posted weaker-than-expected third-quarter earnings ahead of the opening bell and lowered its 2012 earnings and revenue forecast from prior estimates. Interestingly, options activity on HMSY suggests one or more options traders are taking a near-term contrarian view on the stock, positioning for the price of the underlying to rebound somewhat by November expiration. It looks like traders purchased 2,000 calls at the Nov. $22.5 strike for an average premium of $0.50 apiece. These contracts may be profitable at expiration next month in the event that HMSY’s shares reverse course, gain at least 9.1% over current price of $21.08, and settle above the average breakeven price of $23.00.
NutriSystem Inc. (NASDAQ:NTRI) – Third-quarter earnings from the provider of weight management services are just around the corner, and it looks like some options players are gearing up for a rally in the price of the underlying shares. NutriSystem shares, which had been in positive territory this morning, reversed earlier gains to stand 1% lower on the session at $9.96 as of 12:30 p.m. ET. The stock is down more than 35% since the start of the year. Strategists positioning for a post-earnings pop in the share price snapped up front month calls, purchasing more than 500 of the Nov. $11 strike call for a premium of $0.10 each, and buying around 1,300 of the Nov. $12 strike call at a premium of $0.05 apiece. Call buyers stand ready to profit at November expiration should NTRI shares surge 11% and 21%, respectively, to exceed effective breakeven prices of $11.10 and $12.05. NutriSystem is scheduled to report third-quarter earnings next Friday.
Equity Options Analyst
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