Option Traders Place Bullish Bets

The AES Corporation (AES) may be overdue for a turnaround or at least that’s what options traders are betting. Some 16,364 options contracts traded hands on Monday, which is more than 8x the average one-month volume of 1,976 contracts. The vast majority of the interest was centered on the September 17.50 calls, which saw more than 12,000 contracts trade that day alone. The move suggests a $490,000 bet on a sharp increase in AES Corporation’s stock price during the next 46 days.

AES Corporation’s stock has lost nearly half of its value since the middle of June. Analysts attribute at least some of the loss to the poor performance seen by other power companies in the sector. Companies like NRG Energy (NRG) reported a sharp loss in the second quarter as profits declined. However, good news from companies like Entergy Corporation (ENT) have sparked some hopes for positive news over the next two quarters - hopes that sparked at least one large bet.

Last year, AES Corporation was one of the fastest growing wind producers in the United States and the company sees significant opportunities for global expansion in China. In fact, nearly 20 percent of the firm’s global portfolio consists of renewable energies like hydro and wind power. Currently, AES has more than 1,000 megawatts of wind power in operation along with another 6,000 of wind projects in various stages of development in quickly growing emerging markets.

AES Corporation is set to report their quarterly earnings on or before August 11th, which is the SEC’s due date. Many are expecting earnings to be reported this week, which is a notion supported by the heavy options trading seen Monday. The later expiration date suggests that the options traders are looking for a little leeway in case of a bad quarter, but the bet remains large nonetheless.

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