As the market picks up, so do the interesting, and large, call option buys. The largest call buy of the day was just seen in CenterPoint Energy, Inc. (CNP).
One trader has a strong conviction that CenterPoint Energy, Inc. (CNP) is going higher by September. The trader bought a staggering 20,000 CNP September $24 calls. They paid just 60 cents for those calls. That makes for a hug bet with a transaction value of about $1,200,000.
CenterPoint Energy, Inc. (CNP) is currently trading at $23.90 down 4 cents, though it is well off it’s low of the day of $23.47. CNP has a 52 week high of $25.75, and a low of $22.46 on the year. It’s trading much higher than normal volume with over 4.2 Million shares trading by 12:43 pm today.
CenterPoint Energy, Inc. (CNP)just announce quarterly earnings today, August 6, so clearly this is not one of those scary earnings play here. CNP beat estimates today, by 2 cents, beating revenue estimates as well. Yet the stock was down in early trading. Now it’s jumped back to almost even on the day after this huge 20,000 contract call buy.
So what does this trader know that no one else seems to know? May be some pipeline deal or other material news is “anticipated” to be released soon?
We like this trade given it’s size, and the fact that it’s now traded over 31,400 contracts now, but we kind of missed the boat on this as the options are now at an ask of 75 cents, with last trade at 71 cents. We’ll definitely keep this one on our watch list and if we get a quick dip in the share price we’ll try to get this in the 65 cent area.
Fourteen analysts currently follow CenterPoint Energy, Inc. (CNP). The average rating on CNP is “overweight” and the average price target is $27.10. CNP shares are trading at a PE of around 29 now, with a PE for next year forecast at 20. There definitely looks to be room for a nice analyst upgrade / price target increase in the very near future. We have a hunch it’s an analyst firm buying these calls up in front of their news release on said upgrade and price target increase. The last analyst action was August 4, when SunTrust reiterated it’s Neutral rating and lowered their price target from $26.00 to $25.00. Our money is on Credit Suisse or Macquarie to come out with a big price target raise and upgrade.
Either way, we are interested in CenterPoint Energy, Inc. (CNP) and will look to jump into these September $24’s if the price pulls back a bit today.