OptionsHouse

Options Trading News

January 9, 2013  Wed 3:47 AM CT

NRGY: SEE CHART GET CHAIN FIND STRATEGIES
Inergy has been rising sharply since the beginning of 2013, and one trader is counting on more gains from the natural-gas pipeline operator.

optionMONSTER's Heat Seeker system shows that 2,000 July 22.50 calls were purchased for $0.55 yesterday. The volume was 13 times higher than the strike's open interest of just 154 contracts before trading began, so this was clearly fresh buying.

NRGY rose 2.05 percent yesterday to close at $19.88. The stock had been falling since hitting its 2012 highs just under $21 in October, but shares began the new year with a bang by gapping above their 200-day moving average on the first day of trading and have not looked back.

The long calls bought yesterday, which lock in the price where the stock can be purchased, are looking for NRGY to gain at least 16 percent by mid-July. The options could be sold at a profit earlier if the premiums rise with any rally before then, but they will expire worthless if the shares close below the $22.50 strike price at that time. (See our Education section)

Inergy's daily option volume is just 171 contracts, but yesterday's trades pushed it the total to 2,475. Only 35 puts changed hands in the entire session, a reflection of the bullish sentiment.
Share this article with your friends


OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »