By David Russell of OptionMonster
FirstEnergy (FE) is a slow-moving utility but it handed traders some fast money on Friday.
Shortly after the opening bell, OptionMonster's market scanners detected heavy buying in the November 38 calls and the November 39 calls. The paper hit with the stock holding multi-year lows and followed similar bullish activity in recent weeks.
The shares then started grinding higher, and the calls began doing their work. The stock was up 1.36% to $38.84 by the end of the session, but the options had almost doubled in value.
The November 38s, which initially priced for 35 cents to 55 cents, traded for as much as $1.10. And the November 39s climbed to 45 cents from their early range between 20 cents and 25 cents. Some 5,800 contracts traded in the 38s, while the 39s saw volume close to 5,000.
Calls lock in the price where a stock can be purchased. Given how cheap they are, even a small move in the underlying share price can result in significant leverage in the options--which is exactly what happened on Friday in FirstEnergy.
Overall turnover in the name was 10 times greater than average in the session. Calls accounted for a highly bullish 98% of that total.
(Russell has no positions in FE.)