RRI Energy Sees Call-Buying Heat Up

By David Russell, analyst at OptionMonster

HOUSTON (TheStreet) -- Electricity producer RRI Energy (RRI Quote) is up 13% in the last month, and at least one trader expects it to keep powering higher into the new year.

OptionMonster's systems detected heavy buying in the January 7.50 calls Thursday. More than 18,000 of the contracts were traded at nearly 10 times open interest in the strike, which averages a grand total of three calls a day.

Most of the purchases took place in a 10-minute span for 50 cents, indicating activity by a large institutional player. Overall options action in RRI was six times average, with calls outnumbering puts by 35 to one.

RRI, formerly known as Reliant Energy, fell 0.5% Thursday to close at $6.11. The stock, which hit a 52-week high of $17.25 last September, needs to climb 32% by expiration for the calls to turn a profit.

The company reported a narrower-than-expected second-quarter loss on Aug. 3 and doesn't have any further catalysts scheduled on its calendar.

The trade comes a day after unusual options activity was detected in power utility Mirant(MIR Quote).

-- Reported by David Russell at OptionMonster in New York.