Kaydon Corporation (KDN, $60.47, up $1.36) is doing well today and is in “blue-sky territory.” If you are unfamiliar with the term “blue-sky territory” it is something I say when a stock breaks above all previous resistance points and is at new all-time highs. I’ve been talking about “Wind Power” plays for a while now and these stocks are moving.

Granted, sometimes stocks go through fads and they are either undervalued then get overvalued or they are overvalued and everybody sells them. Kaydon is no different. The company is a supplier of wind-turbine bearings and other products and recently reported earnings that matched Wall Street’s estimates. Some analysts believe Kaydon is “pricey” at these levels but some of them may not truly understand Kaydon’s business.

The company is taking steps to take full advantage of the wind energy market and could surprise those same analysts in the upcoming quarters. Only time will tell just how good their earnings will or will not be but some options traders have been buying calls in hopes of a higher stock price.

The June 60 calls (KDNFL, $2.30, up $0.65) are up nearly 40% on Kaydon’s 2% move today. Some options traders are even buying longer-term contracts in hopes of a continued breakout. The October 60 calls (KDNJL, $5.70, up $1.90) are up 50% and the January 60 calls ($4.90,up $0.80) have advanced 20% today.

Rick Rouse