Bulls Return to Ingersoll-Rand

By David Russell of OptionMonster

NEW YORK -- For the second time in less than a week, the bulls are targeting Ingersoll-Rand ( IR).

OptionMonster's tracking programs detected the purchase of some 10,000 July 60 calls, dwarfing the previous open interest of just 75 contracts in what were clearly new positions. The early blocks priced for $1.45, but then the stock pushed higher and premiums ratcheted all the way up to $2.20.

Long calls lock in the price where investors can buy shares in the industrial conglomerate no matter how far they might rise. That way they can be sure of not missing a rally while tying up only limited amounts of capital, though the contracts can quickly lose value if the stock stalls or pulls back.

Ingersoll-Rand shares climbed 2.2% to $59.84 on Wednesday and have appreciated 5% in the last three sessions. The maker of refrigeration equipment, power tools, and golf carts gapped higher on a strong earnings report in April, only to pull back by the middle of this month.

Bullish activity also appeared on Friday as traders snapped up the July 57.50 calls for $1.90 to $2. Those same contracts traded for as much as $3.64 Wednesday.

Overall option volume in the name was 42 times greater than average in the session. Calls accounted for a bullish 93% of the total.

Russell has no positions in IR.


This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

If you liked this article you might like

These Stocks Are Ready to Reverse Course

The Stock Market Is on Fire, Especially in These Sectors: Market Recon

Ingersoll-Rand Is on the Run

With Activist Investor Trian Lurking, Expect M&A Activity at General Electric Under New CEO Flannery

Ingersoll-Rand Continues to Run, but Ready to Rest