Bullish Options Traders Strike On Red-Hot Raytheon Stock

Raytheon stock is being eyed by short-term options traders

Apr 7, 2017 at 2:24 PM
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Raytheon Company (NYSE:RTN) shares exploded out of the gate and haven't looked back. The stock got an early lift from last night's U.S. airstrike against Syria, and was last seen 1.8% higher at $153.46. Moreover, the sharp gains have sent RTN options traders into a frenzy, with bulls flowing toward the shares.

Right now, more than 4,600 Raytheon call options are on the tape -- six times the expected intraday rate. Moreover, intraday call volume is on track to finish in the high 98th percentile of its annual range. The most active strike is the near-the-money April 155 call. Options traders buying these calls to open are anticipating RTN will muscle north of $155 by the close on Friday, April 21, when the front-month series expires.

This is business as usual for RTN options traders. During the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open nearly three calls for every put. The resultant call/put volume ratio of 2.82 resides in the bullishly skewed 88th percentile of its 52-week range.

Today's options traders are likely scoring a bargain on their short-term wagers. The stock's Schaeffer's Volatility Index (SVI) of 14% sits below 82% of readings from the last year. In other words, the options market is pricing in relatively low volatility expectations at the moment.

Even beyond the options arena, plenty of optimism can be detected toward RTN stock. Eleven of 12 analysts consider shares of the Tomahawk missile maker a "buy" or better, without a single "sell" to be found. Plus, a minuscule 1.2% of the stock's float is sold short. Raytheon Company shares have certainly earned this collective confidence. The stock recorded an all-time high of $157.59 late last month and stands on a market-beating 21.4% year-over-year lead.

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