Mike Khouw's Tyco International Ltd. (TYC) Trade

On CNBC's Options Action, Mike Khouw said that there was a lot of activity in Tyco International Ltd. TYC options today. People are speculating that a takeover might take place. Mike Khouw believes that it would be a little bit risky to buy calls in this name, and therefore he wants to make a bullish bet with a call spread. Specifically, he wants to buy the July 55 call for $2.50, and sell two July 65 calls for a total of $1.00. This trade would cost him $1.50, and his break even would be at $56.50. Tyco International Ltd. TYC fell 0.61% today, and it closed at $52.01.