Market News

October 19, 2016  Wed 7:47 AM CT

At least one trader is looking for Calpine to make a comeback by early next year.

optionMONSTER's monitoring system detected the purchase of 1,995 January 12 calls for $1.55 and $1.60 at the same time yesterday. Volume was more than 22 times the open interest in the strike, showing that this is a new position.

Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Education section)

CPN rose 1.58 percent to $12.83 yesterday but is down 13 percent in the last three months. The utility company's next quarterly report is scheduled for pre-market hours on Oct. 28.

Overall option volume was 3 times greater than average in the name yesterday. Calls outnumbered puts by a bullish 84-to-1 ratio.

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Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

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