By Mike Yamamoto
Defense contractor ITT (NYSE:ITT) drew bullish option activity yesterday ahead of its earnings report this morning before the market opens.
Traders snapped up 5,453 April 55 calls in a strong buying pattern, mostly for $0.60 to $0.70. That volume was more than three times the open interest of 1,718 contracts and dwarfed the average turnover of just 81 calls per day at the strike.
ITT closed yesterday up 3.47 percent to $50.45. Except for a few weeks last fall, the engineering company's stock has been trapped in a tight range roughly between $48 and $52 since July 2009.
For the calls bought yesterday to be profitable, ITT would need to rise more than 10 percent by expiration in mid-April.
(Chart courtesy of tradeMONSTER)