Options Trading News

December 7, 2012  Fri 11:40 AM CT

Exelon has been trapped in a tight range since falling hard after its last earnings report, but one trader is apparently betting on a rally by springtime.

optionMONSTER's Heat Seeker tracking system detected the purchase of 2,000 April 31 calls in 3 minutes today, mostly for $0.60. That volume was more than double the strike's open interest of 862 contracts at the start of the session, so this is fresh buying.

EXC is down fractionally at $29.43 in early afternoon trading. The electricity-generation company plunged from $36 on Nov. 1 after announcing third-quarter results and have been trading in a tight range between about $28.50 and $30 since then.

Today's long calls are looking for EXC to gain more than 7 percent by expiration in mid-April. If the stock is below the $31 strike price at that time, those contracts will expire worthless. (See our Education section)

Only 66 puts have traded in today's session, a reflection of the bullish sentiment. The trades follow bullish call buying in earlier-dated contracts on EXC on Nov. 2.
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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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