Johnson Controls, Inc. (JCI) Option Bulls Take Charge

Johnson Controls Inc (JCI) reports earnings next week, and expectations are high


Published on Apr 17, 2015 at 1:45 PM
Updated on Apr 20, 2015 at 5:32 PM

Call volume has exploded in Johnson Controls Inc's (NYSE:JCI) options pits. The contracts are changing hands at a rate 32 times what's normally seen at this point in the day, with heavy activity at the July 55 call. In fact, over 15,000 contracts have crossed here, more than three times as many as the next closest option. It appears traders are buying to open these calls, expecting JCI to topple $55 -- which would mark a record peak -- by July expiration.

Taking a step back, call buyers have been rushing to JCI for the last two weeks. In fact, over that time span at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), roughly 44 calls have been bought to open for each put. The resulting call/put volume ratio of 44.07 is an annual bullish peak. Also coming in at an annual extreme is JCI's Schaeffer's put/call open interest ratio (SOIR) of 0.41, which hasn't been lower during the last 12 months. This implies speculators targeting options that expire in the next three months are more call-focused now than at any other point during the past year.


Options bulls may be expecting the equity's earnings report -- scheduled for release next Thursday morning -- to launch the shares out of the $48-$51 range, where they've been churning between for well over a month. Still, Johnson Controls Inc (NYSE:JCI) has managed a 4.7% lead in 2015 -- thanks in part to some recent M&A buzz -- and was last seen 0.7% higher at $50.60.

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