Option Investor

New Portfolio Position: CERN Bull-Put Spread Projected Gain: $175

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CERN - Cerner $52.71

Cerner (NASDAQ:CERN) is supplier of healthcare information technology. The company's solutions give end users secure access to clinical, administrative and financial data in real time. Cerner implements these solutions as stand-alone, combined or enterprise-wide systems and its solutions can be managed by its clients or via an application outsourcing/hosting model. The solutions are designed and developed using the Cerner Millennium architecture, which is a technology infrastructure that combines clinical, financial and management information solutions. The company provides access to an individual's electronic medical record at the point of care and organizes information for the specific needs of the physician, nurse, laboratory technician, pharmacist or other care provider, as well as for front and back office professionals.

CERN has moved to the top of a recent trading during the past few sessions but with little public news to explain the activity, we can only speculate on the reason for the upside momentum. Regardless of the motive, somebody is buying the stock and the technical indications suggest a reasonable probability of a successful outcome in this bullish position.

Fundamentals Chart Earnings Dates Analyst Ratings

PLAY (conservative - bullish/credit spread):

BUY PUT APR-45.00 CQN-PI OI=59 ASK=$0.20
SELL PUT APR-50.00 CQN-PJ OI=736 BID=$0.50

POTENTIAL PROFIT (X 5 contracts) = $175
MARGIN REQUIREMENT (X 5 contracts) = $2325
COST BASIS = $49.65
LOSS-LIMIT/EXIT POINT = $50.75 (cons) - $49.50 (aggr)

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