Earnings Beat Has Colgate-Palmolive Company (CL) Bulls Knocking

Colgate-Palmolive Company (CL) traders are targeting weekly calls


Published on Jan 29, 2015 at 11:39 AM
Updated on Apr 20, 2015 at 5:32 PM

Colgate-Palmolive Company (NYSE:CL) is 5.4% higher today at $68.66, helped by a fourth-quarter earnings beat and strong organic sales growth. Option bulls have certainly taken notice, with calls trading at five times the normal intraday pace. Moreover, out of CL's 10 most active strikes, eight are calls.

One option seeing notable attention is the weekly 1/30 69-strike call, where more than 300 contracts have crossed the tape. Data gives the impression of buy-to-open activity, as traders expect CL's rally to carry it above $69 -- a level it hit earlier today -- by tomorrow's close, when the contracts expire.

Today's call buying marks a change of pace in the equity's options pits. Over the past 10 weeks, traders have preferred long puts over calls at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). CL's 50-day put/call volume ratio across these exchanges comes in at 1.25 -- higher than 86% of similar readings from the past year.

Before today, Colgate-Palmolive Company (NYSE:CL) had struggled in 2014, dropping almost 6%, and in turn, the analyst community had grown skeptical. Of the 18 covering brokerage firms, 15 rate CL a "hold" or worse. With this morning's gain, though, the stock is now just a stone's throw away from its average 12-month price target of $70.26. If the security can extend this momentum, future analyst upgrades and/or price-target lifts could be on the horizon.

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