Call-Buying on Textron Flies Higher

By Pete Najarian, co-founder of OptionMonster

Najarian provides options picks Monday, Wednesday and Friday in TheStreet.com's Deep in the Money Calls newsletter.

PROVIDENCE, R.I. (TheStreet) -- Textron(TXT Quote) has rocketed 84% in less than two months, and traders apparently expect the aviation company to fly even higher.

Options activity was concentrated Wednesday in the September 17.50 calls, in which 6,847 contracts traded for 25 cents to 40 cents, according to OptionMonster's real-time tracking systems. That was triple the open interest at the strike, which averages just 106 calls a day.

The maker of Cessna jets and Bell helicopters lit up our screens early this month with heavy buying of the August 15 calls for 35 cents in large institutional blocks. A few days later those calls nearly doubled in price as the stock shot up to touch $15. On Wednesday, the shares were well above that level, and the upside calls are again active.

Textron rose 5.68% to close at $15.64 Wednesday. Shares hit their 52-week low of $3.57 in March and were still trading in the single digits at $8.51 as recently as July 8, far below their high of $42.85 from nearly a year ago.

Wall Street has been warming to the stock since the company raised its 2010 cash balance outlook to about $1.5 billion from $224 million. Durable goods data rose in July and included an 18.4% jump in orders for transportation equipment.

Total calls at all strikes outnumber puts by nearly nine to one, suggesting an overall bullish sentiment.