Call buying is looking at further upside in Tyco.
More than 7,000 October 50 calls have traded so far today, with the biggest block of 3,461 purchased for $0.65. This is clearly fresh buying, as the strike’s previous open interest was just 11 contracts.
These long calls lock in the price where the stock can be purchased, providing leverage to the underlying shares. But the contracts can quickly lose value if the stock stalls or pulls back, and they can expire worthless with shares below $50 in mid-October.
— Option Monster