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August 21, 2012  Tue 9:58 AM CT

CPN: SEE CHART GET CHAIN FIND STRATEGIES

Calpine is running today, but traders are calling a top.

CPN climbed 3.43 percent to $18.08 in morning trading. That follows impressive gains in the two previous sessions, which let some investors rack up big gains by owning calls. Shares now stand at levels last seen three months ago, when they were dropping from a 52-week high above $19.

The September 18 calls top the options volume, with 5,000 sold at the bid price of $0.60. The previous open interest was 1,685, so this is a new opening position.

He or she doesn’t anticipate much further upside over the next five weeks. The options probably traded against an existing long stock position in the shares as a covered call. That takes a maximum profit with CPN at or above $18. It also implies that the stock will stay in a range between $17.40 and $18.60 through expiration.

Total option volume is 25 times greater than average in the name.

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