Options Trading News

Exelon has been beaten down since the beginning of the year, but traders remain hopeful for a rally.

Traders were selling May 39 calls for $0.15 and buying June 39 calls for $0.60 yesterday, according to optionMONSTER's Heat Seeker system. They were apparently rolling long positions from one strike to the next to get an additional month for the stock to rise.

Calls lock in the price investors must pay to buy stock, so they can generate leverage in the event of a rally. But they will expire worthless if the stock doesn't move, so yesterday's traders were paying the $0.45 difference between the two strikes to buy more time. (See our Education section)

EXC is a utility-services holding company that generates electricity from nuclear, fossil, hydro, and renewable-energy sources. The stock fell 0.21 percent to $38.82 yesterday and has been beaten to the lower end of its long-term range since the beginning of 2012. Recently is has bounced off the lowest lows as utility stocks draw attention for their strong dividend yields.

Calls in the stock outnumbered puts by almost 11,000 to 2,600, a reflection of yesterday's bullish sentiment.

(A version of this post appeared on InsideOptions Pro yesterday.)