Unusual Options Activity: Johnson Controls International (JCI)

Shares of engineering and construction materials firm Johnson Controls International (JCI) have been in a steady uptrend for more than a year. One trader is betting that steady progress higher will continue.

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  • That’s based on the April 2022 $75 calls. With 199 days until expiration, over 5,200 contracts traded against a prior open interest of 134, for a 39-fold rise in volume. The buyer of the calls paid $4.60 to make the trade.

    Shares of JCI are already up 78 percent over the past year, far beating the overall stock market. Shares trade at about 23 times forward earnings, a solid discount to the overall market’s valuation as well. The stock had traded as high as nearly $77 before pulling back in the past week.

    Action to take: Given the steady rise in shares, investors may like to simply buy shares. The company has a modest but growing dividend as well, with a current yield of about 1.5 percent.

    Traders may like the April calls, for several reasons. First, the trade has ample time to play out. With shares around $74 right now, the stock would need to simply rise $1 for the trade to move in-the-money. Traders can likely nab high double-digit returns before looking to take profits ahead of the time premium on the option losing most of its time premium.

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    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.