Constellation Energy Surges 5.4% – But Is This a Green Energy Rally or a Short-Squeeze Play?

Summary
• Constellation Energy (CEG) surges 5.4% to $324.74 on July 18, trading near its 52-week high of $352
• Volume spikes to 1.72 million shares, 0.55% of float, amid sector-wide nuclear energy tailwinds
• Options frenzy: 199,913 shares traded in 325-strike call alone, signaling bullish bets on AI-driven demand

Constellation Energy is trading at its highest level in months as the nuclear energy sector surges on AI-driven infrastructure optimism. With data center energy demand set to triple by 2027 and new tax credit rules accelerating clean energy projects, the stock's 5.4% intraday gain—capped at $327.01—has ignited a debate between long-term green energy believers and short-term capital efficiency skeptics.

Nuclear Ambitions Meet AI Infrastructure Hype
CEG's 5.4% surge stems from two converging forces: 1) sector-wide acceleration of nuclear projects under the Inflation Reduction Act's revised tax credit timelines, and 2) renewed focus on data center energy solutions as AI demand intensifies. While the stock's 32.48 P/E ratio remains bearish, the S&P 500's 28.81 P/E and record-high market indices create a bullish backdrop. Jefferies' analysis of accelerated renewables spending and Talen Energy's $3.5B gas plant acquisition further validate the sector's momentum.

Utilities Sector Rally: CEG Leads as Exelon Gains 0.77%
The Electric Utilities sector is rallying on revised tax credit rules forcing utilities to fast-track renewable projects. Exelon (EXC), the sector's leader, rose 0.77% as Xcel Energy and WEC Energy Group also advanced. This synchronized move reflects the sector's alignment with AI infrastructure demands, with CEG's nuclear focus providing a unique edge over gas-fired peers like Talen Energy.

Bullish Bets and Gamma-Driven Volatility Playbook
• 200D MA: $263.67 (well below current price) | RSI: 40.52 (oversold) | MACD: -1.97 (bearish divergence)
• Bollinger Bands: Price at $327.01, near upper band of $327.61, suggesting short-term overbought conditions
• Volatility profile: 54.80% IV in 305-strike put vs. 58.09% IV in 325-strike call

CEG's technicals present a high-risk/high-reward setup. The stock is trading in a short-term bearish trend but remains in long-term ranging mode. The 2X leveraged CEGX ETF (up 10.59%) amplifies exposure to this volatility. For options, the CEG20250725C325 and CEG20250725C327.5 contracts stand out:

• CEG20250725C325 (Call)
- Strike: $325 | Delta: 0.5209 | IV: 56.58% | Gamma: 0.014631 | Theta: -1.4611 | Turnover: 199,913
- Payoff (5% up): $341.02 → $16.02 profit per contract
- Key: High gamma ensures sensitivity to price moves, while moderate delta balances directional risk

• CEG20250725C327.5 (Call)
- Strike: $327.5 | Delta: 0.4799 | IV: 51.69% | Gamma: 0.016018 | Theta: -1.3479 | Turnover: 35,722
- Payoff (5% up): $341.02 → $13.52 profit per contract
- Key: Strong gamma and reasonable IV make this contract ideal for capturing momentum without overpaying for volatility

Aggressive bulls should consider CEG20250725C325 into a test of the 50.0% Fibonacci retracement level at $314.89. If the 327.01 intraday high holds, the 325-strike call offers maximum leverage for a potential break above $330.

Backtest Constellation Energy Stock Performance
The conclusion is derived from the backtest data where the 3-Day win rate is 52.92%, the 10-Day win rate is 52.70%, and the 30-Day win rate is 50.97% following an intraday percentage change of 5% in CEG. These rates indicate a higher probability of positive returns in the short term after such an event. The maximum return during the backtest period was 0.55% on day 58, suggesting that while the returns may not be significantly high, they can still lead to modest gains.

CEG at Critical Juncture: Test Resistance or Rejoin Downtrend?
CEG's 5.4% surge brings it to a pivotal moment. The stock must hold above $327.01 to confirm its breakout from a descending price channel; failure could trigger a retest of the 308.08 psychological support level. Immediate watchpoints include the 325-strike call's liquidity and the S&P 500's bearish divergence. With Exelon (EXC) up 0.77%, the sector's momentum remains intact—but traders should lock in profits if CEG closes below its 30D MA of $309.33. The coming week will test whether this rally is a structural shift or a short-term capital inflow.