Calls heat up again in CenterPoint


CenterPoint has broken out, and the bulls keep giving chase.

optionMONSTER's Heat Seeker system detected the purchase of 6,000 July 26 calls yesterday, most of which priced for $0.40, well above the previous open interest of just 628 contracts. There was also heavy volume in the July 25s.

Long calls lock in the price where a stock can be purchased, letting investors cheaply position for a rally. They can generate significant leverage if shares move in the right direction but can also quickly lose value on a pullback. (See our Education section)

CNP rose 0.71 percent to $25.54 yesterday and has been breaking out of a price triangle on its chart in recent sessions. Traders already more than doubled their money in the July 25 calls two weeks ago.

Other names in the sector such as Consolidated Edison, Southern, and NextEra Energy have also been active in the last month as investors return to utilities.

Yesterday's total option volume in CNP was triple its daily average for the last month, with overall calls outnumbering puts by more than 300 to 1.

Disclosure: I am long SO.

(A version of this post appeared on InsideOptions Pro yesterday.)

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