By David Russell, reporter at OptionMonster
NEW YORK -- Electricity company NRG Energy (NRG) has been strong for months, and the bulls came back to the name Tuesday.
OptionMonster's tracking programs showed the purchase of almost 11,000 November 25 calls for 35 cents. That volume dwarfed open interest of just 25 contracts in the strike at the beginning of the day, clearly indicating new buying.
Calls locks in the price where holders can buy shares in the company, so they can generate significant leverage in the event of a rally. But these options will expire worthless if no move occurs.NRG rose 0.61% to $23.09 Tuesday and is up 36% in the last three months. The stock began rallying from long-term lows in late June, then accelerated the next month after announcing that it would merge with Genon Energy to lower costs. The company continues to trade for less than book value, which could make some investors think that it's still cheap. Option volume was five times greater than average in the session, according to our data systems. Calls outnumbered puts by a bullish 20-to-1 ratio. Russell has no positions in NRG.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV