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Tyco International: What Options are Saying

Tyco International reports earnings later this month, and option traders are looking for it to break out.

OptionMonster's real-time tracking systemsdetected the purchase of 14,311 April 39 calls for $0.70 to $0.90 against open interest of only 154 contracts. The transactions pushed overall options volume in the industrial conglomerate to 23 times greater than average.

Tyco rose 0.89 percent to $36.29 in late morning trading. The shares have been consolidating around $36 since mid-October while consolidating in an increasingly tight range. Some chart watchers may interpret the price action as prelude to a sharp move.

The stock needs to climb about 10 percent by expiration for today's calls to turn a profit. The company is scheduled to issue fiscal first-quarter results before the market opens on Jan. 28. Sales and profit exceeded analysts' forecasts the last time it reported on Nov. 10.

The bullish trade comes one session after Goldman Sachs added rival 3M to its Conviction Buy List, citing improved industrial activity.

Calls outnumber puts by 24 to 1 in Tyco, which reflects the bullish sentiment.

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Tyco Competes With:

General Electric*

Honeywell International

United Technologies

(*GE is the parent company of CNBC and CNBC.com.)

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Options Trading School:

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David Russell is a reporter and writer for OptionMonster.

Russell owns shares of TYC.

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Disclaimer