Options Trading News

June 13, 2013  Thu 10:52 AM CT

One trader apparently believes that NRG Energy will hold current levels.

optionMONSTER systems show that a block of 2,650 January 26 puts was sold for the bid price of $2.35 today. This is a new position, as there was no open interest in the strike before the trade appeared.

NRG is down 1.32 percent to $26.09 in midday trading. The wholesale power producer came into the week  above $27 after bouncing off support at $25.

Put selling that is this close to the money is a neutral strategy, betting that NRG will be above $26 but will not run too high through expiration in mid-January. The trader could also be using this strategy with the intention of getting assigned and required to buy the shares, at an effective purchase price of $23.65 when the $2.35 credit from the put sale is included. (See our Education section)

Total option volume in the name already tops 6,100 contracts, more than double its full-session average for the last month.
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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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