Genon Energy's option premiums are through the roof, and one
investor is taking the other side of the trade.
Our tracking systems detected the sale of 5,000 November 2 calls
for $0.25. Volume was more than twice existing open interest in the
He or she probably owns shares in the electricity-generation
company, which has lost more than half its value in the last year.
Selling calls allow the trader to
earn income against the long position
and locks in an exit price of $2.25.
It also permits the trader to capture the extra premium resulting
from GEN's 97 percent
. That's almost triple the stock's historical tendency to move.
GEN fell 1.18 percent to $1.68 yesterday and is back to levels it
last saw in late 2002. The call sale pushed total option volume in
the name to 19 times greater than average.
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