Traders are betting that Raytheon will reach new highs in the next two months.
More than 2,000 February 92.50 calls have been purchased for $1.65 to $1.69 today, according to optionMONSTER's Heat Seeker tracking system. Open interest in the strike was just 213 contracts before the session began, indicating that today's trading is fresh buying.
These long calls lock in the price where the stock can be bought for the next eight weeks no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below $92.50 through mid-February. (See our Education section)
RTN is down 0.36 percent to $90.71 in midday trading after hitting an all-time high of $91.39 in the morning. The defense contractor has been trending higher since its 52-week low of $52.24 at the end of January.
Total option volume in Raytheon tops 4,000 contracts so far today, compared with a full-session average of 1,440 in the last month. Overall calls are outpacing puts by 2.5 to 1.
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