PG&E Options Traders Target Familiar Ceiling

The $20 level has kept a lid on PCG breakouts for most of 2019

by Patrick Martin

Published on Apr 4, 2019 at 1:43 PM

The shares of PG&E Corporation (NYSE:PCG) are up 2.8% to trade at $19.03 today, after the utility company appointed William Johnson as its new CEO. PCG also said it's reshuffling its board, adding 10 new directors, while seven current board members will step down. In the wake of the news, options traders have taken renewed interest in the beleaguered stock.

More specifically, over 17,000 PCG options have changed hands today -- a modest uptick to the expected intraday amount. The April 20 call is most active, but there's also interesting activity at the weekly 4/5 20-strike call, where it appears new positions are being sold. If this is the case, call writers are banking on the $20 level to serve as a short-term ceiling through expiration at the close tomorrow, April 5.

More broadly speaking, long calls have been popular. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows speculative players have bought to open 23,137 calls in the last 10 sessions, compared to 5,669 puts. Considering how short interest increased by 24% in the two most recent reporting periods, its possible some of this call buying could be shorts seeking an options hedge.

PG&E stock has spent most of 2019 churning below that round $20 level -- home to an early January bear gap. In the past six months, the shares have shed 59%, mostly in reaction to the deadly California wildfires in 2018. However, some analysts are starting to warm to PCG, with the stock found at the top of Goldman Sachs' upside list earlier this week. The brokerage firm also expects the security to double over the next 12 months. There's still a ways to go though, with 11 out of 14 brokerages rating PCG a "hold" or "strong sell."

Daily Stock Chart PCG

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