Eaton (ETN, $96.68, up $2.42) continues to roll. The stock gained another 2.5% today and is up nearly $8 for the week. I had mentioned the activity building in the June 95 calls (ETNFS, $3.40, up $1.30) when they were trading for $1.80. Trading volume was strong and the stock made higher highs throughout the week. This sets up well for next week as Eaton continues its assualt on $100. If Eaton can get to $100 then the June 95 calls will be worth at least $5.00.

Apple (AAPL, $188.75, up $2.06) traded higher every day this week ahead of its June 9 release of the 3G iPhone launch next month. Although the impact won’t be seen in its upcoming quarter many expect Apple will crush their estimated 10 million iPhone target well before the end of the year.

Options traders are targeting the June 200 calls (APVFT, $2.91, up $0.16) and the longer-term July 200 calls (APVGT, $6.85, up $0.35).

Before closing, I also wanted to mention the American Society of Clinical Oncology’s (ASCO) annual meeting which is being held over the weekend. Imclone (IMCL, $43.58, up $0.58) and Bristol-Myers Squibb (BMY, $22.79 up $0.31) could see some action come Monday. The companies are expected to give an update on Erbitux that could help lift these stocks higher. Imclone saw plenty of action today in the June 45 calls (QCIFI, $1.55, Up $0.28) as 11,000 contracts traded hands. The July 50 calls (QCIGJ, $0.80, up $0.10) aslo experienced some brisk trading as over 2,000 contracts traded hands.

I’ll give you an update on Monday.

Rick Rouse
Rick@OptionsMentoring.com

Every now and then a company adapts to the environment and is able to see the road ahead. Eaton (ETN, $93.27, up $4.02) has done just that and now it is rewarding its shareholders. The company has slowly switched its focus from auto engines to “developing “green” engines for mass transit. Eaton is supplying the hybrid power system for the 500 hybrid electric vehicles that United Parcel Service (UPS,$70.54, up $2.14) recently ordered.

Eaton’s has grown internationally through acquisitions (11 in 2007) that is helping fuel its growth. In April, the company reported earnings of $247 million, or $1.64/ share. If you exclude charges, they actually hit the high end of their guidance of $1.70. Eaton also raised estimates for 2008 by a nickel to $7.80 to $8.30 a share.

The stock took a big hit from late December when it was at $100 to its $78 bottom in late February. Since then, Eaton has slowly proved to Wall Street that the synergies from these acquisitions are starting to pay off and investors are rewarding the stock. Want even more proof? Eaton’s CEO said he expects top line growth of 25% and nearly 20% of that will come from these acquisitions.

Was yesterday’s big move the one that kick-starts Eaton’s run towards a new 52-week high of $104? As much hype as this stock is getting you would think its Big Brown going for the Triple Crown (that would be June 7 my friends). And since I just mentioned June, I might as well tell you about the June 95 calls (ETNFS, $1.80, up $1.22) for Eaton. They were up 210% yesterday. They are still out-of-the-money but that will change if Eaton starts to race towards $100. Place your bets!

Rick Rouse
Rick@OptionsMentoring.com