The company isn't exactly in a sexy industry, and you probably shouldn't feel bad if you've never heard of it. But take note, it looks like there's plenty of investors placing plenty of bullish bets in options on
Shares of Aon, a Chicago-based, insurance brokerage, consulting and consumer insurance company, were up $1.75 to $41.69, and coming close to their 52-week intraday peak of $42.75. Aon is slated to post earnings Thursday, with the
First Call/Thomson Financial
13-analyst estimate calls for the Chicago-based insurance brokerage to earn 54 cents a share in the third quarter. The company in the year-ago period posted earnings of 52 cents a share.
The options plays on Aon were tilted markedly toward the bullish side Friday on heavier than normal options volume, one options analyst pointed out.
Larry McMillan of
, said that of the 1,458 options that traded on Aon Friday, 1,438 were call options, action that shows a decidedly bullish tone.
Investors use call options, which give them the right but not the obligation to buy a stock for a specified price at a certain time, when they're expecting a stock to rise. Average daily options volume on Aon is 283 contracts, and its implied volatility on the options was also high, McMillan said.
For November 40 options, implied volatility, a key component of an option's price, was at 72, up from 55 Friday, said Paul Foster of
. One month ago the implied volatility was at 41, Foster said. Foster also said that other insurance-related stocks like
St. Paul Cos.
were trading up Monday.
Implied volatility is the annualized measure of how much the market thinks a stock or index can potentially move. Implied volatility generally rises ahead of a company's earnings report, making an option's premium more expensive.
The number of call option contracts far outstripped the number of put options that have been created on Aon as of Friday's close. Total call option open interest as of Friday's close stood at 7,689 contracts, while open interest for puts totaled a paltry 635.
As for trading in the options Monday at midday, volume was modest, though approaching the average daily volume in the options lately. On the
, 100 of the April 45 calls changed hands up 1/2 ($50) to 3 5/8 ($362.50). A little more than 70 of the November 40 calls traded, up 1/8 ($12.50) to 3 1/4 ($325).