Traders Expect Aviation Company to Fly Higher
By: Textron has rocketed 84 percent in less than two months, and traders apparently expect the aviation company to fly even higher.
Options activity was concentrated yesterday in the September 17.50 calls, where 6,847 contracts traded for $0.25 to $0.40, according to OptionMonster's real-time tracking systems. That was triple the open interest at the strike, which averages just 106 calls a day.
The maker of Cessna jets and Bell helicopters lit up our screens early this month with heavy buying of the August 15 calls for $0.35 in large institutional blocks. A few days later those calls nearly doubled in price as the stock shot up to touch $15. Yesterday the shares were well above that level, and the upside calls are again active.
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Textron rose 5.68 percent to close at $15.64 yesterday. Shares hit their 52-week low of $3.57 in March and were still trading in the single digits at $8.51 as recently as July 8, far below their high of $42.85 from nearly a year ago.
Wall Street has been warming to the stock since the firm raised its 2010 cash balance outlook to about $1.5 billion from $224 million. Durable goods data rose in July and included an 18.4 percent jump in orders for transportation equipment.
Total calls at all strikes outnumber puts by nearly 9 to 1, suggesting an overall bullish sentiment.
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Disclosure:
Najarian Owns Textron calls.
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Options Trading School:
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Textron Competes With:
General Electric (GE is the parent company of CNBC and CNBC.com)
United Technologies
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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.
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