Option Care stock (OPCH) was trading at $31.055 as of 10:00 ET Tuesday, up 32.88% after Seeking Alpha reported that McKesson and Clayton Dubilier & Rice agreed to acquire Option Care Health for $32.05 per share. The $5.8 billion deal now dominates the chart far more than any technical signal.
Key takeaways
- OPCH was trading at $31.055 as of 10:00 ET Tuesday, up 32.88% from Monday’s close of $23.37.
- The daily RSI14 is 83.76, above the 70 overbought threshold.
- The daily MACD histogram is 0.44, having crossed above zero on this candle.
- Price trades above the daily EMA20 at $24.03, EMA50 at $23.61, and EMA200 at $25.26.
- The daily ATR14 reads 1.16, up from 0.66 on the prior candle.
Option Care Stock Rallies on Takeover Agreement
Tuesday’s session opened at $31.04. It has traded between a low of $31.02 and a high of $31.08 so far. Volume stands at 544,790 shares, with the session still open.
Notably, this follows an already strong reaction a day earlier. Yahoo Finance reported that Option Care Health shares soared 22% after-hours on Monday, October 5. The report cited a Financial Times article that McKesson and CD&R were in advanced talks to acquire the company.
Before the takeover talk surfaced, a separate Yahoo Finance piece published on Wednesday, September 30, had compared Option Care Health’s home infusion business with BrightSpring Health Services. That report questioned whether the stock remained undervalued. However, that earlier commentary is now overshadowed by the agreed deal price Seeking Alpha reported this week.
Daily Chart Turns Overbought
On the daily chart, momentum reflects the scale of the gap. The daily RSI14 stands at 83.76, deep in overbought territory above the 70 threshold.
In parallel, the daily MACD line is at 0.43, above its signal at 0. The histogram reads 0.44 and is positive, having crossed above zero on this candle.
Price sits above the daily EMA20 at $24.03 and above the EMA50 at $23.61. It also trades above the EMA200 at $25.26. The order is not fully stacked: the EMA50 sits below the EMA20, which in turn sits below the EMA200.
The daily Bollinger upper band is at $27.35, and the current price trades above it. The daily pivot sits at $23.1, with R1 at $23.76 and S1 at $22.72. Price trades well above R1.
Hourly and 15-Minute Charts Confirm the Breakout
Meanwhile, the hourly chart mirrors the daily move. Hourly RSI14 is at 94.46, an extreme reading well above 70.
The hourly MACD line is at 0.77, above its signal at 0.21. The histogram reads 0.57 and is positive. Price sits above the hourly EMA20 at $23.77, above the EMA50 at $23.32, and above the EMA200 at $23.53. The order runs EMA50 below EMA200 below EMA20.
The hourly Bollinger upper band is at $26.91, and price trades above it. The hourly ATR14 reads 0.74, up from 0.21 on the previous candle. The hourly pivot is at $23.38, with R1 at $23.5 and S1 at $23.27. Price sits well above R1.
At the same time, the 15-minute chart shows RSI14 at 97.35, essentially flat against the 97.41 reading one candle earlier. Both readings are extremely overbought.
The 15-minute MACD line is at 1.2, above its signal at 0.44. The histogram reads 0.76. Price sits above the 15-minute EMA20 at $24.68, EMA50 at $23.67, and EMA200 at $23.23. The order runs EMA200 below EMA50 below EMA20.
The 15-minute Bollinger upper band is at $28.73, and price trades above it. ATR14 reads 0.58, down from 0.63 on the prior candle. The 15-minute pivot sits at $31.05, with R1 at $31.09 and S1 at $31.02.
On the surface, RSI14 readings above 90 on both the hourly and 15-minute charts would normally flag exhaustion. However, in this case the extreme readings stem from the gap tied to the takeover price Seeking Alpha reported. That distinction matters: the usual overbought warning carries less weight when price is being repriced against a fixed offer.
Bullish Scenario for Option Care Stock
A constructive scenario for Option Care stock would need price to hold above the daily Bollinger upper band at $27.35 and above the daily R1 at $23.76. The daily MACD histogram would need to remain positive.
On the hourly chart, holding above the EMA200 at $23.53 and above the pivot at $23.38 would keep the breakout structure intact. For the 15-minute window, clearing R1 at $31.09 would show buyers pushing through the top of the current range.
Bearish Scenario: What Would Invalidate the Move
On the other hand, a reversal case would need price to lose the daily EMA20 at $24.03 and fall back toward the daily pivot at $23.1. That would mean giving back a large portion of today’s gap.
On the hourly chart, a break below the EMA200 at $23.53 or below the pivot at $23.38 would weaken the case that the move is holding. For the 15-minute chart, slipping below the pivot at $31.05 and through S1 at $31.02 would signal short-term sellers stepping back in.
Overall, Option Care Health stock is trading at $31.055 as of 10:00 ET, well above Tuesday’s daily pivot at $23.1 and its R1 at $23.76. Every timeframe shows price above its respective Bollinger upper band. The daily ATR14 has climbed to 1.16 from 0.66. What remains uncertain is whether price stabilizes near the $32.05 per-share figure Seeking Alpha reported for the agreed deal, or whether today’s extreme overbought readings give way to a pullback before the session closes.
FAQ
What drove Option Care stock higher on Tuesday?
Seeking Alpha reported before Tuesday’s open that McKesson and Clayton Dubilier & Rice agreed to acquire Option Care Health for $32.05 per share, in a deal valued at $5.8 billion including debt. The stock was trading at $31.055 as of 10:00 ET, up 32.88% from Monday’s close of $23.37.
How overbought is Option Care stock on the daily chart?
The daily RSI14 stands at 83.76, above the 70 overbought threshold. The daily MACD histogram is 0.44 and positive. Price trades above the daily Bollinger upper band at $27.35 and above all three daily moving averages.
What are the key support levels to watch?
On the daily chart, the EMA20 at $24.03 and the daily pivot at $23.1 serve as key supports. On the hourly chart, the EMA200 at $23.53 and the pivot at $23.38 are important levels to hold.
What is the significance of the $32.05 level?
Seeking Alpha reported that $32.05 per share is the agreed acquisition price in the McKesson-CD&R deal. The stock was trading at $31.055 as of 10:00 ET Tuesday, just below that level.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, an investment recommendation, or a solicitation to buy or sell any financial instrument. The analysis provided is not indicative of future results. Investing in financial markets carries a high risk of capital loss. Always do your own research (DYOR) and consult a qualified financial advisor before making any decision.
Cryptonomist and the author hold no positions in the financial instruments mentioned and receive no compensation from the companies covered.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.