Tyco pullback draws bullish strategy

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Tyco International has been pulling back, and one investor is getting long.

optionMONSTER's Heat Seeker tracking system detected the purchase of 6,000 October 52.50 calls for $3.54. An equal number of October 47.50 puts and October 57.50 calls were sold for $2.30 and $1.40. Volume was above open interest in both strikes, indicating that new positions were opened.

The trade generated a credit of $0.16 and will earn an addition $5 if the stock closes at or above $57.50 on expiration. It will also lose money to the downside, and become worthless if shares remain between $47.50 and $52.50 on expiration.

TYC is down 0.85 percent to $51.04 in afternoon trading. The maker of security systems, fire alarms, and valves rallied more than 40 percent between early October and late April but has been drifting lower since then. Despite a track record of strong earnings, the stock was indicated as a potential short-sale candidate by our researchLAB analysis tool on May 23.

Overall option volume in TYC is 12 times greater than average so far today, according to the Heat Seeker.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: TYC

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