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CenterPoint Options Heat Up Again

By David Russell of OptionMonster

NEW YORK -- CenterPoint (CNP) has broken out, and the bullish option traders keep giving chase.

OptionMonster's tracking systems detected the purchase of 6,000 July 26 calls Monday, most of which priced for 40 cents, well above the previous open interest of just 628 contracts. There was also heavy volume in the July 25 calls.

Long calls lock in the price where a stock can be purchased, letting investors cheaply position for a rally. They can generate significant leverage if shares move in the right direction but can also quickly lose value on a pullback.

CenterPoint rose 0.71% to $25.54 on Monday and has been breaking out of a price triangle on its chart in recent sessions. Traders already more than doubled their money in the July 25 calls two weeks ago.

Other names in the sector such as Consolidated Edison (ED), Southern (SO), and NextEra Energy (NEE) have also been active in the last month as investors return to utilities.

Monday's total option volume in CNP was triple its daily average for the last month, with overall calls outnumbering puts by more than 300 to 1.

Russell is long SO.

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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