Exelon (NYSE: EXC) offered to buy NRG Energy (NYSE: NRG) for $6.2 billion or 0.485 of an EXC share for each NRG shares, which is worth about $26.43 for each NRG share. EXC, the biggest U.S. operator of nuclear power plants, closed at $54.50. EXC November option implied volatility of 75 is above its 26-week average of 75 according to Track Data, suggesting larger price movement.

NRG, a generation company with annual revenues of $5.9 billion, closed at $19.33. NRG November option implied volatility of 133 is above its 26-week average of 42 according to Track Data, suggesting larger price movement.

Volatility Index S&P 500 Options-VIX at 70.33; 10-day moving average is 61.44.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Calpine (NYSE: CPN), which is a major power company, has experienced lots of drama over the years. However, the company has been able to stabilize things – and has recently come out of bankruptcy.

But suddenly the drama has returned: NRG Energy (NYSE: NRG), a rival, has made a $11 billion hostile bid for Calpine (it's a stock-for-stock transaction).

And there's lots of momentum for the deal. Keep in mind that Harbinger Capital Partners, which is a major hedge fund, owns 24% of Calpine's shares and is pushing for a combination.

No doubt, NRG-Calpine would be a powerhouse, amounting to roughly 45,000 megawatts. It will also expand NRG's presence in the valuable California market.

True, the valuation for the transactions looks meager. But, I suspect we'll ultimately see a higher bid. According to Harbinger's letter to Calpine:

"We believe this offer represents a good starting point and that the Board should immediately engage with NRG concerning the terms."

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

NRG Energy (NYSE: NRG) confirmed an all-stock transaction with an exchange ratio of 0.534 for CPN shares, valuing the potential transaction at $22.70.

Calpine (NYSE: CPN) closed at $21.28 Wednesday.

CPN overall option implied volatility of 41 is near its 16-week average of 43 according to Track Data, suggesting non-directional risk.

There has not been a nuclear reactor built in the US for over 30 years. People were afraid of Chernobyl, the big Russian reactor disaster in 1986. Maybe the plants were just too dangerous.

But, oil was not at $80 a barrel then. The electricity grid was not suffering when temperatures hit 90 degrees and big cities were faced with "brown outs."

So, NRG Energy (NYSE: NRG) is making the first application for a plant since "before the Three Mile Island accident in Pennsylvania in 1979, according to The Associated Press. The plants would be based in Texas. The federal government expects applications from other large energy companies before the end of the year.

Energy Information Administration expects demand for electricity to move up 42% between now and 2030. The AP says none of these plants could be online before 2015. And the average cost of nuclear-produced electricity was 1.72 cents per kilowatt hour in 2006, compared with 2.37 cents for coal-fired plants and 6.75 cents for natural gas plants, according to the Nuclear Energy Institute, a trade group.

Nuclear energy may cause anxiety in some circles, but it is on the way back. The country can't afford to be without it.

Douglas A. McIntyre is a partner at 24/7 Wall St.