Bidding Buzz Electrifies NEE Options Bulls

Call traders are chiming in at a higher rate today

Assistant Editor
Nov 10, 2020 at 11:12 AM
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The shares of electric power stock Nextera Energy Inc (NYSE:NEE) are up 2.7% at $77.53 at last check, on reports of the company's $15 billion all-stock bid for utility company Evergy (EVRG). Evergy reportedly rejected the bid, however, Elliot Management -- one of its largest investors -- is urging them to immediately reconsider the transaction. 

Yesterday, the stock soared past pressure at the $76 level to a new record high, trading up at $83.34 before dropping lower by the close. Today, NEE is making another run at this all-time high, and sports a 28% year-to-date lead. 

The brokerage bunch appears confident on the equity, with nine of the 13 analysts in coverage at a "strong buy" rating, and the remaining four a "hold." Meanwhile, the 12-month consensus price target of $74.46 is now a slight discount to current levels. 

Options bulls are surrounding NEE in droves today. So far, 5,213 calls have crossed the tape -- two times what's typically seen at this point with call volume pacing for the 99th percentile of its annual range. These premiums are attractively priced at the moment as well, per NEE's Schaeffer's Volatility Index (SVI) of 28%, which sits higher than just 17% of readings from the past 12 months. This implies that options players are pricing in relatively low volatility expectations at the moment. 

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