Options volume on Xylem (Ticker: XYL) is up sharply on Tuesday due to heavy trading in July expiry calls. Overall volume is above 6,000 contracts as of midday in New York, which is well above total open interest in XYL of around 4,300 contracts. Shares in the water technology company are up more than 1.0% at $38.48 as of the time of this writing. XYL shares touched a fresh 52-week high of $38.73 roughly one hour into the trading week.
Traders appear to be buying $40 strike call options out several months, positioning for shares in the name to rally substantially during the next two to five months. The Apr $40 strike calls traded more than 660 times against open interest of 141 contracts, with the bulk of the volume likely purchased at an average premium of $1.02 each. The most traded options by volume on XYL thus far in the session are the Jul $40 strike calls, with around 5,000 contracts in play and well in excess of existing open interest of 722 contracts. Time and sales data suggests most of the Jul $40 strike calls were purchased at an average premium of $1.87 apiece. Traders long the Jul $40 calls stand ready to profit at expiration in the event that Xylem shares rally 9.0% over the current price of $38.48 to exceed the average breakeven price at $41.87.
