Fortune Brands Home & Security: Huge Option Buy (FBHS)

This morning, Fortune Brands Home & Security(NYSE:FBHS) saw a very unusual, large call option trade.  One very enthusiastic trader bought 3,885 August $45 calls, almost all at the ask, in an opening trade.  There is also some action in the  FBHS August $40 calls but it’s not clear if those were by the same trader.

Fortune Brands Home & Security is trading at $40.59, up 59 cents so far today, on fairly light trading of 550,000 shares.  The stock has a 52 week low of $35.80 and a high of $47.92.   Clearly this trader knows something few others do, about Fortune Brands Home & Security near term prospects.

The copy cat traders have jumped into this one as well, but we missed the boat on this as we get ready for the long weekend, so have to sit this one out.  Over 4100 of the August $45 calls have now traded, last at 65 cents, while the Aug $40 calls have seen 906 traded so far today. The open interest in the August $45’s was just 5 prior to today.

So given the huge call buying, it’s clear some material fact on Fortune Brands Home & Security (FBHS) has leaked, but it’s not so clear what that info may be.  It could be an earnings leak, as the company is set to announce earnings on July 21, 2014 for the second quarter.  This is a definite possibility.  A good, old fashioned, friends and family positive earnings leak.

Looking at the analyst situation, 12 analysts currently have a average rating of OVERWEIGHT on Fortune Brands Home & Security and a price target of $47.67.  So it’s possible that an analyst is about to announce an upgrade and price target increase.

Fortune Brands Home & Security is a home and security products designer and manufacturer, involved in many home markets such as Kitchen & Bath, Plumbing, windows and door systems, and security and storage systems.  Not super sexy, and not likely that there is any big contract announcements coming, though it is possible a buyout offer is coming maybe.

Here’s the chart on Fortune Brands Home & Security (FBHS)