Johnson Controls, Inc (JCI) is currently trading around $53.00 in a 52 week range of $38.60-$53.41. The stock is higher by 3.25% today and touched new 52 week highs on positive earnings news. The stock has been doing well this year with gains approaching 10% year to date. Whats interesting about this action in JCI is that it was very well telegraphed by large options blocks ahead of the release.
The bullish orderflow in JCI began last week when a trader paid $0.45 for 3,005 of the JCI May 52.5 calls. This trade was opened on Apr 16th and open interest in this line grew to over 10,000 contracts ahead of the earnings release. Traders also bought large blocks of the JCI Jul 55 Calls. Last Friday a trader bought over 6,000 of these calls for $0.75. These calls looked weak this morning as JCI showed initial weakness. The stock reversed however and rallied to new 52 week highs making these trades extremely profitable. Let’s break down the traders profit pn each block.
Trade: A trader bought 3,005 JCI May 52.5 Calls for $0.45
Risk: $45 per 1 lot
These calls traded as high as $1.70 today making this trade an absolute blowout winner, if this trader held this block to the highs they would have profited $375,625 on a $135,000 bet.
Trade: A trader bought 6,512 JCI Jul 55 Calls for $0.75
Risk: $75 per 1 lot
These calls traded as high as $1.70 today meaning if this trader held their position to the highs they would have profited $618,640.
These trades are fantastic examples of why watching orderflow ahead of earnings is important. Both of these trades were absolute blowout winners.