By Pete Najarian, co-founder of OptionMonster
NEW YORK -- Exelon (EXC) has been beaten down since the beginning of the year but traders remain hopeful for a rally.
Traders were selling May 39 calls for 15 cents and buying June 39 calls for 60 cents Monday, according to OptionMonster's real-time tracking systems. They were apparently rolling long positions from one strike to the next to get an additional month for the stock to rise.
Calls lock in the price investors must pay to buy stock, so they can generate leverage in the event of a rally. But they will expire worthless if the stock doesn't move, so Monday's traders were paying the 45-cent difference between the two strikes to buy more time.Exelon is a utility-services holding company that generates electricity from nuclear, fossil, hydro, and renewable-energy sources. The stock fell 0.21% to $38.82 Monday and has been beaten to the lower end of its long-term range since the beginning of 2012. Recently it has bounced off the lowest lows as utility stocks draw attention for their strong dividend yields. Calls in the stock outnumbered puts by almost 11,000 to 2,600, a reflection of Monday's bullish sentiment. Najarian has no positions in EXC.
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