Honeywell International Inc. (HON) Option Bulls Triple Their Money

Honeywell International Inc. has surged more than 3% following its quarterly earnings report

Oct 17, 2014 at 10:00 AM
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Option players were active on Honeywell International Inc. (NYSE:HON) ahead of the industrial giant's quarterly earnings report, which was released bright and early this morning. Overall volume traded at two times the daily average, but calls emerged as the options of choice. By the numbers, 6,290 calls changed hands, versus 5,010 puts. Eleventh-hour bulls rolled the dice on some earnings-related upside, and by the looks of it, their bets are paying off.

Specifically, the most active HON strike on Thursday was the October 87.50 call, where 2,533 contracts crossed the tape. The majority of these went off at the ask price, implied volatility surged 8.6 percentage points, and open interest rose overnight -- all signs of buy-to-open activity. Traders purchased these calls at a volume-weighted average price of $0.67, and thanks to today's post-earnings pop, the options are currently priced at $2.11, resulting in a profit of 215%.

Heading into today's session, HON was down 5.5% on the year, due mostly in part to the security's 11% decline since hitting its most recent high of $96.93 on Sept. 19. However, on the heels of Honeywell International Inc.'s (NYSE:HON) better-than-expected third-quarter results and an upwardly revised full-year forecast, the stock has soared 3.2% to trade at $89.14.

 

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