by Houghton and Atkeson 05/13/08
Energen Corp. (EGN) is a company primarily focused on the development and production of natural gas and oil resources in the United States. It also operates a natural gas utility.
Earnings growth and shareholder return have averaged more than 30 percent a year for the past five years, and the company has increased its cash dividend every year for the past 25 years.
As is common with high-quality stocks, it always looks expensive. When you consider the stock, you either feel like you are buying at the high or that the story has finally broken, never to recover on the rare occasions when it dips. The end result is that you just never buy the stock or options.
Since last Friday, options investors are piling in with call options with October and January expiration dates at the $70 (EGNJN) and $75 (EGNAO) strike prices, respectively, for a total of more than 11,000 contracts changing hands.
Since March 11, the call open interest has spiked upward (it has more than doubled, while put interest remains flat) and the stock has responded by moving from $60 to $70. It appears the option investors know what they are doing when it comes to EGN.
For more fresh options trading ideas from Andrew and Nick, click here.
