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Shaw Call-Buyers Light Up July Options

By Pete Najarian, co-founder of OptionMonster

NEW YORK -- Shaw Group (SHAW) recently got a big contract win, and on Monday buyers lit up the July options.

The July 34 calls saw strong activity, with investors paying 69 cents to 75 cents. More than 4,000 of those contracts changed hands against open interest of 100 contracts -- not off the charts, but still heavy for a name that usually trades fewer than 1,300 contracts a day.

Those calls lock in the price investors must pay to buy shares, so they can provide a lot of leverage if the construction company rallies into the summer. But if the stock doesn't move enough, they could expire worthless.

Shaw closed at $30.27 Monday, up 0.97%. Last week it received notice from South Carolina Electric & Gas to proceed on its engineering, procurement, and construction contract for two Westinghouse AP1000 nuclear power units and related facilities.

More than 7,500 calls traded in the name Monday vs. just 104 puts, a reflection of the session's bullish sentiment.

Najarian has no positions in SHAW.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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