Nisource Plunges 5% as Regulatory Shifts and Put Options Surge Spark Volatility

Summary
• NiSource (NI) shares nosedive 6% amid Indiana regulatory changes threatening Genco spinoff timelines.
• Unusual put options activity surges, with $40 puts trading at 48x normal volume.
• Intraday price swings from $41.91 to $38.45 highlight extreme volatility.

Nisource’s 5% intraday drop to $39.685 has ignited a frenzy of options trading and regulatory scrutiny. The stock’s sharp decline follows news of Indiana utility commissioner departures and Citigroup’s warning about Genco spinoff delays. Meanwhile, at-the-money puts have exploded in volume, signaling a potential inflection point for long-term investors.

Indiana Regulatory Overhaul Sparks Genco Spinoff Delays
Citigroup analyst Ryan Levine’s warning about regulatory delays in Indiana has triggered a sell-off. The departure of two commissioners and the rate pay advocate has raised concerns about the Genco spinoff’s timeline, a key catalyst for NiSource’s stock. With the Indiana Utility Regulatory Commission (IURC) now under new leadership, the application for the spinoff faces potential modifications or rejection. This regulatory uncertainty has eroded investor confidence, compounding the stock’s decline.

Electric Utilities Sector Mixed as Nextera Drifts Lower
Nextera Energy (NEE), the sector leader, fell 1.24% on the same day, reflecting broader utility sector caution. While Nisource’s decline is tied to regulatory risks, Nextera’s move mirrors macroeconomic concerns about interest rates and infrastructure spending. The sector’s mixed performance underscores divergent catalysts: Nisource’s near-term regulatory hurdles versus Nextera’s exposure to long-term energy transition trends.

Options Playbook: Capitalizing on Volatility with Strategic Put Shorting
• RSI: 39.57 (oversold)
• MACD: 0.162 (bullish divergence)
• Bollinger Bands: Price at 38.45 (near lower band)
• 200D MA: 39.15 (support level)

Nisource’s technicals suggest a potential rebound from oversold levels, with the 200-day moving average at $39.15 acting as a key support. The RSI’s oversold reading and MACD’s bullish divergence hint at short-term buying interest. However, the stock’s sharp intraday drop has created high-conviction options opportunities.

Top Options Picks:
• NI20250919C40 (Call):
- Strike: $40, Expiry: 9/19, IV: 25.06%, Leverage: 56.70%, Delta: 0.456, Theta: -0.0426, Gamma: 0.1903, Turnover: 313,778
- IV (Implied Volatility): Indicates moderate risk/reward balance.
- Leverage (56.70%): Amplifies gains if price rebounds.
- Delta (0.456): Sensitive to moderate price swings.
- Gamma (0.1903): High sensitivity to price movement.
- Turnover (313,778): Strong liquidity ensures trade execution.
- Payoff (5% downside): $0.00 (strike above current price).
- Why it stands out: High gamma and leverage make this call ideal for a rebound scenario.

• NI20251017C40 (Call):
- Strike: $40, Expiry: 10/17, IV: 22.95%, Leverage: 34.51%, Delta: 0.485, Theta: -0.0204, Gamma: 0.1257, Turnover: 750,730
- IV (22.95%): Suggests lower near-term volatility.
- Leverage (34.51%): Balances risk with upside potential.
- Delta (0.485): Sensitive to price recovery.
- Gamma (0.1257): Moderate sensitivity to movement.
- Turnover (750,730): High liquidity for entry/exit.
- Payoff (5% downside): $0.00 (strike above current price).
- Why it stands out: Strong liquidity and moderate leverage position it for a mid-term rebound.

Action Alert: Aggressive bulls may consider NI20250919C40 into a bounce above $40.00, leveraging high gamma for rapid gains.

Backtest Nisource Stock Performance

Act Now: Navigating Nisource's Regulatory Crossroads
Nisource’s 5% drop reflects regulatory uncertainty but also creates a compelling entry point for long-term investors. The stock’s technicals and options activity suggest a potential rebound from oversold levels, particularly if the Genco spinoff remains on track. Watch for a break above $40.00 to validate the near-term bottom. Meanwhile, sector leader Nextera’s -1.24% move highlights broader utility sector caution. Immediate action: Position in NI20250919C40 for a short-term rebound or monitor regulatory updates for a catalyst-driven reversal.