By Mike Yamamoto of OptionMonster
NEW YORK - Option traders were piling into NiSource (NI) on Monday as shares pulled back from all-time highs.
About 8,000 June 38 calls were purchased for 15 cents and 20 cents in midday trading, according to OptionMonster's tracking systems. Open interest in the name was a mere 61 contracts before the trades appeared, showing that this is fresh buying.
These long calls lock in the price where the stock can be purchased through mid-June no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if the stock remains below $38.
NiSource shares reversed early losses with the call action Monday and closed higher by 0.14% to $35.99, not far from the lifetime high of $37.18 it reached last Thursday. The energy company beat earnings and revenue forecasts on April 30, and management reaffirmed guidance.
Total option volume in the name reached 12,600 Monday, 22 times its daily average for the last month. Fewer than 100 of those contracts were puts, reflecting the session's strongly bullish sentiment.
Yamamoto has no positions in NI.