NEW YORK -- NRG Energy (NRG) saw upside option activity throughout the summer, and now the bulls are coming back ahead of next week's earnings report.
OptionMonster's trade scanners detected the purchase of more than 5,300 January 27 calls Monday, mostly for $2 to $2.15. Previous open interest was just 2,516 when the session began, so new money was definitely put to work.
These calls lock in the price where a stock can be purchased through mid-January no matter how far it might climb. They can also generate significant leverage in a rally but will quickly lose value if shares don't advance.
NRG shares fell 0.49% to $28.25 on Monday. The stock peaked at $30.29 on Oct. 28, its highest price since September 2008, but has been declining steadily since then. The power company is scheduled to release third-quarter results on the morning of Tuesday, Nov. 12.
Total option volume in the name topped 7,400 Monday, more than triple its daily average for the last month. Only 360 of those contracts were puts, a reflection of the session's bullish sentiment.
Yamamoto has no positions in NRG.