How trader is staying bullish on Tyco

optionMONSTER

A large trader is betting that Tyco shares will see another leg higher in coming months.

optionMONSTER's Heat Seeker system detected the sale of 3,000 July 35 calls for $0.88 and the purchase of 3,000 July 38 calls for $0.15. Volume was well below previous open interest in the 35s and above it in the 38s, indicating that a long-call position was rolled to a higher strike.

The trader is likely taking some money off the table after the stock's recent rally and is using some of the proceeds to buy the higher-strike calls in anticipation of even more gains. The new long calls are looking for TYC to rise above $38 by mid-July, but they could expire worthless if shares remain below that strike price. (See our Education section)

TYC is up 0.79 percent to $34.54 in afternoon trading. The industrial conglomerate, whose products range from burglar alarms to sprinkler systems, rose in late April after reporting strong quarterly numbers but has run into resistance at the $34 level for the last three weeks. The company is scheduled to present at the Sanford C. Bernstein Strategic Decisions Conference on Thursday.

Total option volume in tops 6,200 contracts so far today, 8 times its daily average for the last month. Only 44 puts have changed hands in the session, a reflection of the day's bullish sentiment.

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