Electric utility firm Exelon Corporation (EXC) is down 3% over the past year, although shares have been trending higher since July. One trader sees shares continuing higher into early 2025.
That’s based on the January 2025 $41 calls. With 133 days until expiration, 4,373 contracts traded compared to a prior open interest of 113, for a 39-fold rise in volume on the trade. The buyer of the calls paid $0.90 to make the bullish bet.
Exelon shares recently traded for about $39, so shares would need to rise by $2, or about 5%, for the options to move in-the-money. The $41 strike price is right under the stock’s 52-week high of $42.15.
While the stock has been largely flat over the past year, earnings have surged by 30%, and revenues are up by 11%. And shares are reasonably priced at about 15 times earnings.
Action to take: As a utility, growth is often on the slower side, but a higher dividend payout makes up for it. At current prices, Exelon pays just under a 4% yield, and has raised that payout over the past year. Utilities are a reasonable place for investors looking for current income and safety in the stock market.
For traders, the January $41 calls are reasonably priced for a further rally into next year. Shares are likely to keep trending higher, as the stock’s relatively high yield will look more attractive as interest rates start to decline.
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.