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More Upside Ahead For This Fast Food Chain: Traders

Tuesday, 13 Apr 2010 | 7:53 AM ET

Yum Brands has been ripping for weeks, and some traders are playing for even more upside as the company prepares to report earnings results tomorrow.

Traders targeted the April 42 calls, where 7,546 contracts traded yesterday in a strong buying pattern for $0.25 and $0.30. The calls changed hands in some large blocks, far above the previous open interest of just 545 contracts, according to OptionMonster's real-time tracking systems. More Options Tips from Pete NajarianOptions Tips from Jon NajarianRead The CNBC Stock Blog

The global casual-dining company

closed the regular session up 0.2 percent to $40.78 and rose another 0.42 percent in after-hours trading. Its shares have risen some 20 percent since the beginning of March, hitting new 52-week highs along the way.

Expiration is at the end of this week, so the stock has four days to gain roughly 3.7 percent for those purchased April 42 calls to turn a profit. The company will issue its first-quarter earnings release tomorrow after the market closes.

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Yum Brands Competes With:

McDonald's

Burger King

Wendy's

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Options Trading School:

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Disclosures:

Najarian owns a YUM long call spread

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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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Disclaimer

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