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.
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