Laserscope engages in the design, manufacture, sale, and service of medical laser systems and related energy devices for the medical office, outpatient surgical center, and hospital markets worldwide. The company's product portfolio consists of lasers and other light-based systems for applications in the urology, dermatology, and aesthetic surgery markets.
Laserscope was among the "percentage gainers" during last week's bullish market activity and the upside move was supported by heavy trading volume despite a lack of public news to explain the unusually strong buying pressure. A quick review of the company's fundamentals suggests a favorable earnings outlook, however there is no obvious explanation for the sudden renewal of interest in the issue. Traders who can tolerate some additional volatility in the underlying issue may find that this position offers a reasonable risk-versus-reward outlook.
Fundamentals Chart Earnings Dates Analyst Ratings
PLAY (conservative - bullish/credit spread):
BUY PUT JUL-30.00 LXQ-SF OI=43 ASK=$0.20
SELL PUT JUL-35.00 LXQ-SG OI=2167 BID=$0.60
INITIAL "NET-CREDIT" TARGET = $0.45-$0.50
POTENTIAL PROFIT (X 5 contracts @ $0.45) = $225
MARGIN REQUIREMENT (X 5 contracts) = $2275
RETURN ON INVESTMENT (max) = 9.89%
COST BASIS = $34.55
INITIAL EXIT STRATEGY:
Once the position is open, traders should place a (contingent) order to close the short ($35.00) put options if the stock price moves below $34.50 on an intraday basis. A "net-debit" order of $1.00-$1.10 to exit the entire spread may also be appropriate for some portfolios. Future adjustments to this loss-limit/exit point will be posted in the MCM Newsletter.