Calls lock in the price investors must pay for the stock, so they can generate some nice leverage in the event of a rally. If it doesn’t climb, however, these options will expire worthless.
J&J shares rose 0.44 percent to $68.90. It rallied sharply in June and has been consolidating in a range since then, holding support above its 2011 highs.
That could be leading some chart watchers to believe that the stock is ready to keep running for some time. The unusual thing about yesterday’s option trade was their extremely long time horizon.
Overall option volume was low for the name at just 17,129 contracts, well below the 59,000 it sees in a typical session. But those 2015 calls really stood out, accounting for more than 40 percent of the total.
—By CNBC Contributor David Russell
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Options Trading School:
David Russell is a reporter and writer for OptionMonster. Russell has no positions in JNJ.