OptionsHouse

Options Trading News

June 17, 2013  Mon 5:16 AM CT

CPN: SEE CHART GET CHAIN FIND STRATEGIES
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


OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »