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
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
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