OptionsHouse

Options Trading News

May 23, 2014  Fri 5:16 AM CT

DHR: SEE CHART GET CHAIN FIND STRATEGIES
Industrials saw heavy option activity yesterday, with Danaher and Tyco showing upside activity.

optionMONSTER systems show that a Danaher investor sold a winning position in 3,000 of the June 75 calls for $2.90 and purchased a new one with 4,000 July 77.50 calls for $2.05. So the trader took some profits and is still positioned to profit from gains for another month.

A similar trade hit in Tyco less than an hour later: This time, 3,000 July 44 calls were sold for $0.67 while July 46s were bought for $0.20. The investor is left with a credit of $0.47 and will make more money if the stock continues higher.

Long calls lock in the price where a stock can be purchased, allowing traders to profit from a rally without ever owning the shares. But if the stock stalls or drops, the contracts could quickly lose value. (See our Education section)

DHR popped 2.29 percent to $78.03 yesterday, and TYC advanced 0.33 percent to $42.77. Both stocks are within striking distance of their 52-week highs, and industrials as a sector gained 0.19 percent in the session.

Option volume was 4 times the daily average in Danaher and 8 times the normal turnover in Tyco. Overall calls outnumbered puts by a wide margin in both names.

Disclosure: I own DHR calls.

(A version of this post appeared on InsideOptions Pro yesterday.)

Share this article with your friends


Related Stories

DHR

Danaher bulls hoping for breakout

March 24, 2015

The industrial conglomerate has been trending higher for years, and now the calls are active again with earnings due next month.

OptionsHouse

Premium Services

Archived Webinar

Education & Strategy

Short Gamma

Last week, we talked about long Gamma. We said that long gamma is acquired by purchasing options and when you...

View more education articles »