Options Trading News

January 14, 2013  Mon 3:16 AM CT

Exelon has been range-bound for the last two months, but traders are looking for the electricity producer to power higher in the next five weeks.

optionMONSTER's Heat Seeker system shows that about 1,600 February 30 calls were purchased for $0.35 on Friday. The volume was almost double the the strike's open interest of 831 contracts before trading began that day, indicating that this is fresh buying.

EXC rose 0.1 percent to $29.29 on Friday, less than a dollar of their 52-week low of $28.40. The stock plunged from the $36 level after the company's last quarterly report in early November, and shares have been trapped in a tight range mostly between $29 and $31.50 since Thanksgiving.

Friday's long calls, which lock in the price where traders can buy the stock, are looking for EXC to gain roughly 4 percent by Feb. 15. But those contracts will expire worthless if the shares close below the $30 strike price at that time. (See our Education section)

Total Exelon calls outpaced puts by more than 2 to 1 on Friday.
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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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