The bulls want to get a jolt from electricity company NRG
optionMONSTER's Heat Seeker monitoring program detected a surge of
upside activity in the name today, with two large trades in
particular standing out. The first appeared shortly after the open
as some 6,000 July 29 calls were bought for $0.20 and a similar
number of July 27 puts were sold for $0.15.
The investor paid just $0.05 to enter the position, which is very
similar to owning shares. It will track moves to the upside or
downside through the end of next week. He or she has also agreed to
buy the stock for $27 if they close below that level, suggesting
that little downside risk is seen for the near term.
NRG is trading at $28.33 this afternoon, up 1.72 percent on the day
and 23 percent in the last year. The shares have been pushing
against long-term resistance around $28 that dates back to 2009.
Some chart watchers may expect a dramatic move if that price range
The Heat Seeker showed 5,000 September 28 calls purchased for $1.55
later in the morning. A block of 5,000 September 27 calls was also
sold for $2.15, but volume was below open interest. That suggests
the investor closed a winning position and rolled to the higher
The trader collected a credit of $0.60 and remains exposed to
further upside in the share price. (See our
section for more on how to manage positions with options.)
NRG raised its long-term free cash-flow guidance on June 24, saying
it was receiving more cost savings than expected from its
acquisition of former rival GenOn. The company hasn't yet announced
the date of its next quarterly release, but last year's calendar
suggests it will occur in early August.
Calls account for a bullish three-quarters of the volume so far
today. Total option activity is 7 times greater than average,
according to the Heat Seeker.
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