$NRG call buyers score

NRG Energy (NRG) shares have been rebounding from its recent year-to-date low, delivering handsome profits to well timed option trades.

On May 27, Market Rebellion’s Unusual Activity Service found that 2,700 July $33 calls were bought for $1.05 to $1.20 above open interest of just 151 contracts with shares at $32.39.

Those calls sold for as much as $4.20 this afternoon, at least 3.5 times their purchase prices. The stock rose 13.65% in the same time period, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a 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.

NRG closed the session higher by 1.72% at $36.67.