What's behind call sale in NRG Energy

By
A A A

NRG Energy has potential resistance at $23, and one investor is targeting that level.


optionMONSTER's monitoring programs detected the sale of about 4,700 September 23 calls for $0.50 against open interest of just 875 contracts. The trade was probably the work of a shareholder in the power-generation company who's looking to generate income by using a covered call strategy.

NRG is down 2.38 percent to $21.73 this afternoon. While it's gotten hammered along with the rest of the market in the last month, it's still up more than 10 percent so far in 2011, while the S&P 500 is down about 9 percent.

The shares started coming back to life in the first four months of the year after a long period of weakness. It found support around $23 in June, which could make some investors think that will now prove resistance.

Writing calls at that level will compel them to sell shares if NRG goes back to $23. But including the credit earned, their exit price will be $23.50. (See our Education section)

Overall option volume in NRG is 5 times greater than average so far today.



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: NRG

optionMONSTER

optionMONSTER

More from optionMONSTER:

Related Videos

Stocks

Referenced

100%

Most Active by Volume

124,429,622
  • $47.87 ▲ 10.45%
86,937,934
  • $9.99 ▲ 6.28%
74,401,985
  • $7.92 ▲ 11.24%
43,464,235
  • $59.64 ▲ 0.69%
42,148,695
  • $130.28 ▲ 0.47%
41,471,941
  • $34.01 ▼ 0.64%
40,701,089
  • $11.99 ▼ 8.75%
39,983,675
  • $15.64 ▼ 0.32%
As of 4/24/2015, 04:15 PM


Find a Credit Card

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