Options Trading News

Tyco International has been pulling back, and one investor is getting long.

optionMONSTER's Heat Seeker tracking system detected the purchase of 6,000 October 52.50 calls for $3.54. An equal number of October 47.50 puts and October 57.50 calls were sold for $2.30 and $1.40. Volume was above open interest in both strikes, indicating that new positions were opened.

The trade generated a credit of $0.16 and will earn an addition $5 if the stock closes at or above $57.50 on expiration. It will also lose money to the downside, and become worthless if shares remain between $47.50 and $52.50 on expiration.

TYC is down 0.85 percent to $51.04 in afternoon trading. The maker of security systems, fire alarms, and valves rallied more than 40 percent between early October and late April but has been drifting lower since then. Despite a track record of strong earnings, the stock was indicated as a potential short-sale candidate by our researchLAB analysis tool on May 23.

Overall option volume in TYC is 12 times greater than average so far today, according to the Heat Seeker.