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CenterPoint Option Activity Draws Major Attention

Wednesday, 29 Aug 2012 | 6:45 AM ET
Electricity pylon pass the Ffos-Y-Fran opencast coal mine in Merthyr Tydfil, Wales.
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Electricity pylon pass the Ffos-Y-Fran opencast coal mine in Merthyr Tydfil, Wales.

It was hard to take my eyes off CenterPoint Energy yesterday.

The public-utility holding company is engaged in the transmission and distribution of electricity, serving approximately 2 million metered customers in Texas. The company beat on earnings and upped its guidance earlier this month. Its key growth drivers include stable regulated operations, higher rates, ongoing infrastructure development projects, and a strong balance sheet.

The options started lighting up around the noon hour yesterday as I left the “Fast Money: Half Time Report” show on CNBC. The November 20 calls traded in a hurry, with more than 5,000 hitting for $1.05 and $1.10 in just four minutes. A few of the February 2013 calls traded, as well.

Those call options (learn more) lock in the price investors must pay to buy shares, which gives them nice leverage in the event of a rally. If CenterPoint doesn’t move, however, the calls will lose value over time. If it drops, they could become worthless.

CenterPoint shares rose 0.68 percent to $20.60 yesterday, and is bouncing at its 100-day moving average. More than 7,000 calls traded versus just 50 puts. Total volume was about 14 times normal levels.

—By CNBC Contributor Pete Najarian

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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. Najarian has no position in CNP.

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