Options Trading News

October 25, 2013  Fri 3:47 AM CT

Teco Energy doesn't usually see much option activity, but the utility company is seeing some notable call buying ahead of its earnings report next week.

optionMONSTER's Heat Seeker system shows that 2,051 November 17.50 calls were bought for $0.15 in about 2 minutes yesterday. Open interest in the strike was 821 contracts before the trade appeared, indicating that it is fresh buying.

These long calls lock in the price where the trader can buy the stock through mid-November no matter how far it might climb. But if shares remain below $17.50, the contracts will expire worthless three weeks from today. (See our Education section)

TE was up fractionally yesterday to close at $17.25 as it tries to break back above its 200-day moving average. Shares of the electricity and gas utility have been range-bound mostly between $16 and $19 since mid-2010.

The company will announce third-quarter results before the market opens next Thursday, Oct. 31.

Yesterday's call buying made up almost all of Teco's option volume, which was 30 times its daily average for the last month. Not a single put changed hands in the name during the session, reflecting the day's bullish bias.
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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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