Options Trading News

January 9, 2013  Wed 3:47 AM CT

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


Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

View more education articles »