Bulls Are Eatin' Up Eaton: Najarian

Photo: facebook.com/eatoncorporation

Eaton has been running higher for months, and traders are looking for more upside.

OptionMonster's trade scanners yesterday detected a call roll in the diversified industrial manufacturer, which recently hiked its quarterly cash dividend by 11 percent. The investor sold 5,000 March 62.50 calls for $0.90 and bought 5,000 April 65 calls for $0.90.

It cost nothing to adjust the position, and the trader now has an additional month to profit from potential gains in the stock. Calls lock in the price where investors can buy shares, so they can generate nice leverage if Eaton keeps rising.

The company acquired Cooper Industries in 2012, and now the electrical business has swelled to 60 percent of revenue from 48 percent last year. The stock trades at a 12 forward price-to-earnings ratio and, looking further ahead, analysts expect profit of $5.98 a share by 2015.

Eaton shares eased off earlier highs after the calls hit, but they still finished the day up 0.05 percent to $62.15.

Overall option activity in the name was bullish, with 15,800 calls trading against just 380 puts. Total option volume was quadruple its daily average.

—By CNBC Contributor Pete Najarian

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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. Najarian has no positions in ETN.