Why Is This Utilities Firm Seeing Upside Options Activity?

Duke Energy drew upside option activity yesterday after the company lost out on a bid to buy two Kentucky utilities from Germany's E.On.

The North Carolina power company rose 3.94 percent to $16.64 in yesterday's regular session on more than four times the average share volume. The option trading also intensified as word spread that Pennsylvania electricity producer PPL had purchased E.On's U.S. subsidiary for an estimated $6.7 billion.

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OptionMonster's real-time systemsdetected 12,314 calls traded at the May 17 strike, where the previous open interest was just 409 contracts. The calls changed hands in a strong buying pattern, mostly going for $0.10 to $0.20.

For those options to turn a profit, Duke's stock would need to rise roughly 3 percent by expiration on May 21. Overall calls in the name outpaced puts by 5 to 1.

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Duke Competes With:

American Electric Power

Constellation Energy

Progress Energy

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Disclosure:

Najarian owns DUK long calls

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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.

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Disclaimer