In this photo illustration, a smartphone displays the logo of Constellation Energy Corporation (NASDAQ: CEG). (Photo illustration by Cheng Xin/Getty Images)
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With a current share price of approximately $330.38, Constellation Energy (CEG) is trading about 18% below its 52-week high.
As the largest producer of carbon-free nuclear power in the U.S., Constellation sits at the center of several powerful long-term themes—rising electricity demand from data centers and AI, grid reliability concerns, and the push toward decarbonization. Those tailwinds have helped drive strong stock performance over the past year, but they’ve also raised the question of valuation. Separately, see How Microsoft Stock Can Jump To $600?
Do you believe CEG stock represents a solid long-term investment at its present price? What if it were available at a 40% discount, around $200 per share? If you see that as an excellent opportunity and have some funds ready, here’s a trade to consider.
8.8% annualized yield at a 40% margin of safety, achieved through the sale of Put Options.
- Sell a long-dated Put option set to expire on 1/15/2027, with a strike price of $200
- Earn approximately $970 in premium per contract (each contract represents 100 shares)
- This translates to about 4.8% annualized yield on the $20,000 you allocate for the potential purchase of the stock
- This cash, placed in a savings or money market account, will earn an additional 4.0%, bringing the total yield to 8.8%
- Moreover, you position yourself to acquire CEG stock at a substantially discounted price of $200
Nonetheless, this is not the only stock strategy available. Trefis High Quality Portfolio offers a sophisticated structure designed to mitigate stock-specific risks while providing upside exposure.
Potential Trade Outcomes: You Gain Either Way
Stock Price Outcome
1) CEG stays above $200: You retain the entire $970 premium — an additional 4.9% income over the next 366 days on cash that could earn only 4.0% or less. You do not purchase the stock and simply take the cash.
2) CEG closes below $200: You will be required to purchase 100 shares at $200. However, considering the $970 premium, your effective cost per share drops to just $190.30 — about a 42% reduction from the current price.
However, to maintain conviction in this trade, you desire to see long-term positive potential in the stock. If it comes to that, you want to be enthusiastic about purchasing the stock at a low price.
First, you want to ensure that the fundamentals are sound. For more information, see Buy or Sell CEG Stock or look at Constellation Energy Investment Highlights.
Second, you want to have a clearer understanding of your competitive advantage and the favorable trends within the industry. Here’s why we are confident.
Reasons to Hold CEG Stock for the Long Term
Constellation Energy stands out as the largest producer of carbon-free energy in the U.S., primarily through its extensive nuclear fleet, which provides a considerable competitive advantage in a world increasingly prioritizing decarbonization and electrification.
The demand for reliable, clean energy is a strong trend, further supported by the energy requirements of AI and data centers. This creates a long-term favorable environment for the company. While regulatory risks exist associated with nuclear power, the essential nature of their assets and their strong market position render them a critical component of the nation’s energy framework. We feel confident in owning a leader in this vital industry for the long haul.
Competitive Edge
We regard CEG’s economic moat as WIDE, mainly due to its Cost Advantage.
- Constellation is the leading producer of carbon-free energy in the U.S., managing the nation’s largest nuclear fleet, which gives them significant scale and cost advantages in delivering reliable, 24/7 clean electricity.
- The company commands a leading market share in the commercial and industrial sectors, serving as a primary energy supplier to three-fourths of Fortune 100 companies, indicating a robust competitive position.
- Despite facing lawsuits related to variable-rate pricing for residential customers, the ability to employ such pricing shows a level of pricing power, though it carries some reputational risks.
- High retention rates among key commercial customers indicate a loyal customer base, likely due to the complexities involved in switching energy providers for large operations and the value of Constellation’s energy management solutions.
Refer to Constellation Energy Full Analysis.
Favorable Industry Trends
The industry trends are STRONG, with a projected CAGR of 5.55% – 8.5% (Sources: Fortune Business Insights, Spherical Insights).
Secular Trends: Decarbonization and Electrification (driven by AI data centers and ESG mandates)
Key Risks: Regulatory changes affecting the nuclear industry and the potential for technological disruptions from new energy storage solutions.
Financial Controls
Cash Generation: Positive Free Cash Flow
Balance Sheet: The company holds a substantial debt burden, especially following the Calpine acquisition, but retains an investment-grade credit rating. S&P Global Ratings confirmed a ‘BBB+’ rating with a stable outlook in January 2026.
Not comfortable with options or stock-specific trades? PORTFOLIOS provide an even better alternative.
A Multi-Asset Portfolio Surpasses Picking Stocks Alone
Markets fluctuate differently, but a diverse mix of assets mitigates volatility. A multi-asset portfolio ensures you are invested and minimizes the impact of sharp declines in any one area.
The asset allocation model of Trefis’ Boston-based wealth management partner generated positive returns during the 2008-09 crisis when the S&P fell over 40%. Our partner’s strategy now encompasses Trefis’ High Quality Portfolio, which has consistently outperformed its benchmark, including all three indices: the S&P 500, S&P mid-cap, and Russell 2000.
