Investors are staying bullish on Tyco

Mike Yamamoto (
December 30, 2013

Traders extended bullish positions in Tyco on Friday for the second session in a row as shares reached their highest level in 12 years.

optionMONSTER systems show that 2,000 January 41 calls were sold for the bid price of $0.78 while 2,000 February 43 calls were bought mostly for $0.52. Volume was below the previous open interest in the nearer-dated contracts, indicating that a long position was closed and rolled to the higher strike one month later.

The investor is taking some money off the table and using the rest to purchase the later-dated calls to stay in the trade. The new long calls lock in the price where the stock can be bought for the next eight weeks no matter how far it might climb, but the contracts will expire worthless if shares remain below $0.43 in that time. (See our Education section)

On Thursday traders were rolling long calls from the January 39 strike to the February 40s. The company has not yet scheduled its next quarterly report, but last year's calendar suggests that it will be released in late January.

TYC gained 1.45 percent on Friday to close at $41.21 after reaching an intraday high of $41.44, its highest price since January 2002. Shares of the industrial conglomerate, whose products range from burglar alarms to sprinkler systems, are up about 42 percent this year.

Total option volume in the name was just shy of 7,200 on Friday, nearly 7 times its daily average for the last month. Only 182 of those contracts were puts, a reflection of the session's bullish sentiment.

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