United Technologies is expected to benefit from its purchase of Goodrich last September, and the bulls are getting on board now.
Friday’s options focused on a near-term move with heavy buying in the March 85 Weekly calls, which traded 4,600 times as large blocks priced for $0.38 to $0.45, according to OptionMonster’s tracking systems. Open interest at the strike was just 10 contracts when the session began, so there was definitely new money going to work.
Such calls lock in the price investors that must pay to buy shares, so they can deliver huge leverage if the stock moves in the right direction — but they only have until the end of this week to pay off. If the stock doesn’t rally, the contracts will expire worthless.
United Technologies rose 0.57 percent to $83.97 on Friday. After a presentation the day before, Wells Fargo raised its price target to a $93 to $97 range from $80 to $95. The analyst said management is making solid investments in aircraft engines to sustain momentum for its Pratt & Whitney unit.
Activity was pretty busy in the session overall, coming in at almost triple its daily average. More than 15,000 calls traded versus fewer than 2,000 puts .
—Najarian has no positions in UTX.
Additional News: United Technologies Cuts Stock Issue for Goodrich
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