Owning calls locks in the price investors must pay to buy shares, so they can generate significant leverage if the stock continues to rally. If it drops or stalls, however, they will lose all or most of their value.
Calpine shares rose 2.39 percent to $18.03 yesterday and is up 19 percent so far this year. The stock has been gradually working its way higher since the S&P 500 index bottomed in March 2009 and as natural-gas generation takes market share from coal-fired plants. Earnings and revenue also beat analyst forecasts by a wide margin in the third quarter.
Overall option volume was 14 times greater than average in the session, with calls outnumbering puts by 6 to 1.
—By CNBC Contributor David Russell
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David Russell is a reporter and writer for OptionMonster. Russell has no positions in CPN.