×

Why Options are Hot on This Bleach Maker

Options action was 19 times above average in Clorox yesterday as traders speculated on a takeover of the bleach maker.

OptionMonster's tracking systems show that volume surged to 7,582 in the August 65 calls and to 3,737 in the September 65 calls, compared with existing open interest of a single contract between the two strikes. The August 65 calls traded for $0.10 to $0.25, while the September 65 strikes changed hands for $0.20 to $0.45.

Clorox rose 0.95 percent to $59.30 yesterday, trading as high as $59.81 at the peak of the options frenzy. The stock, at its highest prices since late November, would have to climb another 10 percent by expiration for the calls to turn a profit.

The next confirmed catalyst for the stock is on Aug. 3, when Clorox reports fiscal fourth-quarter earnings before the bell.

Money also flowed into the August 60 calls, which traded 3,966 times for $0.75 to $1.40. Volume was more than twice existing open interest.

Purchasing dominated trading in all three strikes, causing calls to outnumber puts by 18 to 1.

___________________________
Options Trading School:

___________________________

___________________________

Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.

___________________________

Disclaimer