Back on July 28 we wrote about a big call buy Black Hills Corp (BKH) when a trader bought over 1,000 February $60.00 calls for $1.55 per contract. Well those haven’t worked out yet for the initial trader, but it may be a good time to pick some of these up for just 85 cents now. But now a new call buy came through today on BKH.
A trader has bought 2,000 February $60 calls for just 70 cents now. That’s a nice discount to the original buyer’s price of $1.55. As I said those calls are now up to 85 cents on the ask, but still a good bet for the non risk averse type of investor. This bet has a transaction value of $140,000.
Black Hills Corp (BKH) is currently trading at $51.38 down 67 cents, though it is well off it’s low of the day of $58.66 earlier today. BKH has a 52 week high of $62.13, and a low of $46.62 on the year. It’s trading volume is only 99000 shares trading by 1:20 pm today.
Black Hills Corp (BKH)just announced quarterly earnings yesterday, August 5, so this is no earnings play here. BKH missed estimates by 5 cents, on much lower earnings than expected. So it’s no surprise the stock was down in early trading. Now it’s jumped back some on the day after this large 2,000 contract call buy.
So whats the reason behind these call buys in BKH? Your guess is good as ours, but clearly this trader isn’t guessing with $140,000. There is good reason for it, it just hasn’t been announced to the general public yet.
We like this trade given it’s size, and the fact that it’s now a much more attractive entry point than the original buyer on July 28.
Six analysts currently follow Black Hills Corp (BKH). The average rating on BKH is “overweight” and the average price target is $62.00. BKH shares are trading at a PE of around 19 now, with a PE for next year forecast at 18.67. It’s certainly possible that an upgrade is coming but it doesn’t seem that likely. The last analyst action was July 9th when JP Morgan lowered their price target from $59.00 to $58.00.
Either way, we are interested in Black Hills Corp (BKH) and have jumped on the bandwagon.