Traders bet on bounce in FirstEnergy

By
A A A

FirstEnergy has been languishing for two years, but traders apparently think that it's done falling.


optionMONSTER's tracking systems detected the sale of about 6,800 July 35 puts, most of which priced for $0.55 to $0.60. Volume was more than 9 times open interest in the strike.

Investors also purchased 3,000 July 39 calls in FE for $1.27 to $1.50 throughout the first part of the session, with some blocks changing hands about the same time the puts were sold. That suggests investors were using options to create synthetic long positions in the stock, although it isn't clear that the transactions were related.

Regardless, the combination of put selling and call buying reflects a belief that downside is limited and the next likely move is higher.

FE dropped 0.80 percent to $38.36 yesterday. The electricity stock climbed sharply earlier in the week after finding support at its 200-day moving average and has been making successively higher lows since May--potentially bullish chart patterns.

The gains have come despite a weak earnings report on Feb. 16 and seem to match a pattern of sentiment shifting toward more conservative companies. For instance, utilities are the best-performing sector in the S&P 500 over the last month, while former leaders such as technology and industrials have gotten punished as investors worry about slowing economic growth.

Overall option volume in FE was 12 times greater than average yesterday.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.



This article appears in: Investing , Options

Referenced Stocks: FE

optionMONSTER

optionMONSTER

More from optionMONSTER:

Related Videos

Stocks

Referenced

60%

Most Active by Volume

72,223,555
  • $15.85 ▲ 2.06%
57,618,289
  • $112.34 ▲ 4.29%
49,834,968
  • $57.29 ▲ 0.28%
48,763,614
  • $24.57 ▲ 2.89%
39,835,520
  • $9.32 ▲ 1.08%
39,627,764
  • $103.90 ▲ 2.82%
38,175,110
  • $105.44 ▼ 0.33%
36,279,602
  • $43.36 ▲ 3.68%
As of 9/2/2015, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com