Utility generator Constellation Energy (CEG) is up 128% over the past year, far beating out the overall market. One trader is betting on a pullback in the months ahead.
That’s based on the June $250 puts. With 137 days until expiration, 7,502 contracts traded compared to a prior open interest of 151, for a 50-fold rise in volume on the trade. The buyer of the puts paid $14.22 to make the bearish bet.
Constellation shares recently traded for about $310, so shares would need to sink by $60, or about 20%, for the option to move in-the-money.
Shares have mostly traded in the $250 range before they attempted to break out higher, so it’s a logical price point for shares to retest on a correction.
Earnings jumped 64% last year on a 7% increase in revenues, and investors see Constellation as a potential winner in the AI energy race given its nuclear power facilities.
Action to take: Constellation shares have gotten increasingly volatile lately, and investors may want to look for a pullback under $300 before buying. Constellation also pays just a 0.5% dividend following its massive price move higher.
For traders, the June $250 puts are well positioned for any market weakness or further fears about growth in the AI space in the months ahead. Traders can likely see mid-double-digit returns or better on the options.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
