Calpine juices returns for calls

Calpine rose with other utility companies today, providing rare profits for bullish traders as the rest of the market plunged.

On April 7, Investitute’s proprietary programs identified the purchase of 3,000 June $11 calls in one print for $0.60 with shares trading for $10.69. This was clearly a new position, as open interest in the strike was only 1,721 contracts before that session began.

Today those calls traded for $2.25, a gain of 275 percent. The stock rallied more than 23.5 percent in the same period, an impressive move but one that paled in comparison to that of the options.

Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

CPN rose 5.4 percent today to close at $13.07. Calpine, which provides power to utilities, rose with other companies in the sector as investors sought their relative safety and high dividend yields in the broader market selloff.

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