Red-Hot Dow Stock Hoping for Post-Earnings Pop

Fresh off 3M (MMM) and Boeing (BA) earnings today, the struggling Dow Jones Industrial Average (DJI) barely gets a breather before another blue chip steps into the confessional. Consumer goods conglomerate Honeywell International Inc (NASDAQ:HON) reports third-quarter earnings before the open tomorrow, and options traders are betting bullishly ahead of the event. 

Honeywell stock has a history of lackluster post-earnings reactions. Shares gapped 5.2% lower in late July after its second-quarter report, and suffered a post-earnings move to the downside after the last five reports. For tomorrow's trading, the options market is pricing in a 5.1% post-earnings move, much more than the average post-earnings move of 2.9% after the last eight reports.

HON was last seen 0.8% lower to trade at $220.39, a chip shot from Monday's annual high of $222.98. The shares are 5% higher year to date and boast a 21.4% year-over-year lead. A chunk of these gains are from October alone; the stock is on track for its best month of the year amid reports the company plans to spin off its advanced materials business. Keep an eye on the equity's 14-Day Relative Strength Index (RSI) though, sitting all the way up in 'overbought' territory at 90. 

Options traders are unfazed. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 9,166 calls in the past two weeks, compared to 1,872 puts. The resultant 10-day call/put volume ratio ranks in 93rd percentile of its annual range, indicating the rate of call buying is near 12-montn highs.