NRG Energy (NRG, news, chart) saw double its normal trading volume Monday on opening positions in the October 37.5 puts and calls. Open interest in both contracts increased by more than 10,000. Most of that can be traced back to blocks of 9,291 contracts that traded on the ISE around 11:30 Eastern time. Both of these blocks hit bidside. For example, the puts traded for $1.90. The bid ask quote was $1.90 to $2.10 at the time. Meanwhile, the calls traded for $2.80 when the bid ask was $2.80 to $3.00. So, the action seems to be part of some straddle selling and, with NRG trading around $3.80, possibly a bet that the stock will stay in a range and or drift to $37.50 by October options expiration.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.