Schaeffer's Trading Floor Blog

Are SunPower Corporation (SPWR) Short Sellers Getting Nervous?

Analysts and short sellers are still wary of uptrending SPWR

by 9/9/2013 10:29 AM
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SunPower Corporation (NASDAQ:SPWR) has more than quadrupled in 2013, and touched a near-four-year high of $28.15 in late July. Since then, the stock has taken a breather atop its 80-day moving average, which served as a springboard in April, and was last seen at $23.22. Against this backdrop, option players are picking up calls at an accelerated clip, either to gamble on more upside or to hedge their bearish bets.

During the past five sessions, SPWR saw 1,611 calls change hands on the Chicago Board Options Exchange (CBOE), compared to just 40 puts, resulting in a call/put volume ratio of 40.28. This ratio is among the top 25 highest on the exchange, underscoring the heightened affinity for calls over puts.

Expanding that to two weeks, and including data from the International Securities Exchange (ISE) and NASDAQ OMX PHLX (PHLX), speculators have bought to open more than 15 SPWR calls for every put. The 10-day call/put volume ratio of 15.20 stands just 14 percentage points from a 12-month high, suggesting option buyers have been picking up SPWR calls at a much faster-than-usual clip.

As a result, the equity's Schaeffer's put/call open interest ratio (SOIR) sits at 0.49, indicating that calls roughly double puts among options expiring in three months. This ratio rests in the 24th percentile of its annual range, implying that near-term option traders are more call-skewed than usual right now.

As alluded to earlier, despite SPWR's technical prowess, short interest accounts for almost 26% of the stock's total available float. As such, it's possible that the shorts have been picking up long calls -- especially of the out-of-the-money variety -- to hedge their pessimistic positions in the event of a rebound to new highs.

Whatever the motive, SPWR sports a Schaeffer's Volatility Scorecard (SVS) of 92. An elevated SVS indicates that SPWR has tended to make outsized moves over the past year, relative to what its option prices have projected.

Elsewhere on Wall Street, just four of 10 analysts deem SunPower Corporation (NASDAQ:SPWR) worthy of a "buy" or better rating. Should the stock resume its quest for new highs, a round of upgrades -- or a short-squeeze situation -- could translate into contrarian tailwinds for the shares.

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