Tuesday, May 10, 2011

Trade of the Day: NRG Energy September $25/$28 bull call spread 5,000x

The Trader
A trader placed a bullish bet on NRG Energy be executing a September $25/$28 call spread $5,000 for a $1.10 debit.

The break even point for this spread is $26.10 by September expiration. NRG closed at $24.95 today. The trader's call spread has limited risk and limited profit potential. The max risk is limited to the debit paid, $550,000 at an underlying stock price of $25 and below. The max profit potential is capped at an underlying stock price of $28 and above.

The chart shown above is the NRG Energy daily stock chart. You can see that NRG has not traded above the break even price in the entire calendar year of 2010. The highlight shows how the stock bounced right off of the break even price level in 2009.

NRG traded 10x daily average option volume. The 52-week range is a low of $18.22 and a high of $25.14. NRG Energy, Inc. is a wholesale power generation company.

No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.

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