Eastman Chemical Draws Bullish Trade

By Mike Yamamoto, managing editor of OptionMonster

KINGSPORT, Tenn. (TheStreet) -- Eastman Chemical(EMN) broke out of a three-month range this week and one trader is making a large bet that the stock will continue rising into 2010.

Nearly 80% of Tuesday's option activity in the name took place in a single block of 4,500 calls bought at the January 60 strike for $2.70 Tuesday afternoon, according to OptionMonster's real-time tracking systems. The strike's activity was far above the average daily volume of six calls and nine times the open interest of 541 contracts, reflecting newly established positions.

The stock fell 2.07% Tuesday to $58.09. The shares would need to rise at least 8% for the January 60 calls to turn a profit.

The stock has traded sideways since early August with resistance around $56 and $57, but Monday it finally broke above that level and hit a new 52-week high of $59.45 before closing slightly lower. Interestingly, that was the same day that Barron's magazine reported a $6.5 million stock sale by former Eastman CEO J. Brian Ferguson last week.

The chemical company last month beat third-quarter analysts' estimates on earnings and revenue. Its next scheduled event is an analyst day on Nov. 17.