Options Trading News

November 6, 2013  Wed 2:14 AM CT

A large position appears to be betting on continued resistance in Centerpoint Energy.

A trader bought 4,271 November 25 calls for their ask price of $0.20 against previous open interest of 24,649, according to optionMONSTER systems. At the same time, he or she sold the same number of December 25 calls for the bid price of $0.45 in volume far above open interest of 173 contracts, so that is a  new position.

Given this data and the time to expiration, the trader is apparently rolling a short-call position out a month in time while taking in more than twice the premium. That was likely done against long shares in a covered-call position, which is bullish up to the $25 strike price but gives up any gains above it. (See our Education section)

CNP was down 0.78 percent to $24.26 yesterday. The utility company tested resistance at $25 last week and closed above that price only twice, at its highs at the start of August.

More than 8,700 CNP options traded overall yesterday, 11 times its daily average in the last month.
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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.

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