Is OptionMonster.com trying to manipulate Duke Energy (NYSE: DUK)?

OK, it’s time to let the cat out of the bag; I’m a part-time, highly speculative investor. It’s more of a hobby really, as I don’t allocate much capital to these investments. I read constantly, but do research only when my interest is piqued -- and trade even more sparingly.

One company that caught my attention this past week was Duke Energy Corporation (NYSE: DUK). This energy company (primarily in the business of delivering electricity) has seen it’s stock battered lately. In this all-around pessimistic economic climate, that’s no surprise. However, lately, in the last month, the slide has been even more dramatic, for no apparent reason. This is no AIG or GM, and there’s no high-risk leveraging in sight; this is an actual profitable company, with a dividend to boot.

I have no position in this company, and I wouldn’t have noticed it if it were not for a huge amount of April 12.50 call option buying this past Thursday (unhedged bets that the stock price, now around $12, will be higher than $12.50 by April 17th). Perhaps it’s that someone knows something (good news coming perhaps, as energy and electricity grid upgrades were on the list of Obama stimulus plan priorities), or perhaps it’s just an optimistic bunch of speculators who think this stock is oversold and is due for a quick rebound.

Regardless, that’s not so much the point. I’m taking the time to write this not because I’m trying to spread investment advice, rather to raise some curious observations on the reporting of DUK. OptionMonster.com (a company and web site run by the, now quasi-famous, two Najarian brothers who make frequent appearances on CNBC, in particular the TV channel’s “Fast Money” show) highlighted the anomaly in trading in DUK options early on Friday, however the chart Jon Najarian posted in the article was clearly not correct; it shows DUK stock hitting a multi-year bottom below $8 in early 2003. The last time DUK stock was below $8 was in the mid-1980’s. The stock did indeed hit a multi-year trough in 2003, on March 10, but it was at $12.32 – a price higher than the current stock price. (In case you’re interested, the last time the stock was at levels seen this week, you’d have to go back to 1989.) If you don’t believe me, just go chart it yourself.

Initially, I naturally thought that this was just a simple error on the part of OptionMonster.com. Now, I’m not so sure. Especially after seeing this blog post by Jon Najarian on the CNBC web site with the headline: “Options Traders 'Extremely' Bearish on Duke Energy”. Obviously this much call option buying (when not counter-balanced by put option volume) is bullish, not bearish. Another error? A simple typo, a coincidence, or is something else going on? To his credit, Najarian did describe the situation correctly in the blog post, speculating that it’s possible that some traders might think that this stock has hit bottom (thus, implying a bullish bet has been made). But, it’s the blog post title that gets indexed, it’s also what people scan when reading through headlines. Is it possible that the OptionMonster.com boys are trying to hold back investors from pilling into DUK so that they can have the time to lock in their own upside bets?

But, like I said, it could just be a coincidence: two erroneous slips on the same stock by a man who's reporting is usually spot on…