Options Trading News

June 17, 2013  Mon 5:16 AM CT

Traders want to generate some profits with electricity producer Calpine.

optionMONSTER's Heat Seeker program detected the purchase of some 1,600 June 21 calls for $0.55 to $0.70. Volume was more than 10 times previous open interest at the strike, indicating that new positions were initiated.

These long calls lock in the price where shares can be purchased, letting investors cheaply position for a rally before the end of the week. The contracts can also generate significant leverage, doubling or tripling from even a small gain in the underlying stock. (See our Education section)

CPN rose 1.97 percent to $21.73 on Friday and has been slowly trending higher since the market bottomed more than four years ago. It began the month around $19.50, rallied above its 50-day moving average, consolidated, and is now continuing to the upside.

Total option volume was 7 times greater than average in the session, with calls outnumbering puts by a bullish 21-to-1 ratio.

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

Share this article with your friends


Premium Services

Education & Strategy

The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »