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Bulls hope to power up in Calpine

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Calpine is drawing upside option activity ahead of its earnings report tomorrow morning.

More than 7,200 August 21 calls have been purchased this morning, led by a print of 4,362 that went for $0.30. Open interest in the strike was just 139 contracts before the session began, so this is clearly fresh buying.

These long calls lock in a $21 purchase price for the stock no matter how far it might rise. But the contracts could expire worthless if CPN remains below that level through expiration in mid-August. (See our Education section)

CPN is down 0.86 percent to $20.17 this morning, near the lower end of a tight range that has been in place since early March. The power-generation company is scheduled to announce second-quarter results tomorrow before the market opens.

Total option volume in the name tops 7,800 contracts today, 25 times its daily average for the last month. Only 92 puts have traded so far, a reflection of the day's bullish sentiment.

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