Exelon has bounced hard, and traders are protecting their
optionMONSTER's Depth Charge monitoring program detected the
purchase of about 20,000 May 31 puts for $0.50 to $0.60, dwarfing
previous open interest of just 31 contracts. The April 32s were
also bought for $0.50 more than 5,000 times.
make money when a stock falls because they lock in the price where
shares can be sold. Investors use them to hedge existing positions
or to speculate on a drop. (See our
EXC fell 1.49 percent to $32.44 yesterday, but is up 18 percent
since the start of January. That rebound followed years of selling
pressure in the electricity company, which operates nuclear power
plants and runs local utilities.
Given its longer-term downtrend, some traders may expect a pullback
following the recent rally. That would explain Wednesday's bearish
Puts accounted for a 92 percent of the volume, according to Depth
Charge. Total option activity was 13 times normal amounts.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.