Nicor Options Soar Higher

Nicor Inc. (GAS) shares and options climbed higher on Thursday as investors continue to look forward to higher natural gas prices. The gas distributor has faced sharp criticism from nearly 500 customers who complained to a consumer watchdog group. Natural gas prices have hit a record high of $1.45 per therm in July, which prompted the company to request a rate hike of $4.460 per month. The company contends that it still offers the lowest gas rates in Illinois even after the rate increase.

More than 12,185 call options traded hands on Thursday, which is nearly 20 times the average daily volume of 619 options. The majority of the trading took place at the October $40 calls, which saw nearly 10,000 contracts trade hands. The second most traded expiration was the October $35 calls, which saw 2,200 contracts trade hands. Currently, these options are predicting that shares will remain above $49.30 per share during the next 22 days.

Shareholders also remain bullish on an investment by Harbinger Capital, which doubled its stake in late August. The hedge fund, which is well known for its shareholder activism, now owns more than 2.83 million shares representing a 6.3 percent stake in the company. Some shareholders are hoping that the hedge fund will take action to unlock value while others are banking on the fact that the hedge fund is simply playing a recovery in natural gas companies.

Nicor is a distributor of natural gas and a transporter of containerized freight in the Bahamas and the Caribbean region. Nicor also owns several energy-related ventures, including Nicor Services, Nicor Solutions and Nicor Advanced Energy, which provide energy-related producs and services to retail markets and Nicor Enerchange, a wholesale natural gas marketing company. Nicor Gas maintains franchise agreements with most of the communities it serves, allowing it to construct, operate and maintain distribution facilities.

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