Schaeffer's Trading Floor Blog

Stocks to Watch Thursday: SunPower Corporation, Chesapeake Energy Corporation, and Illumina, Inc.

Analyzing SPWR, CHK, and ILMN ahead of tomorrow's trading

by 4/23/2014 4:53 PM
Stocks quoted in this article:

Momentum names that made notable moves on Wednesday and could continue to do so into Thursday's session include solar power company SunPower Corporation (NASDAQ:SPWR), oil-and-gas issue Chesapeake Energy Corporation (NYSE:CHK), and scientific tools concern Illumina, Inc. (NASDAQ:ILMN). Here is a quick look at these stocks ahead of tomorrow's opening bell.

SunPower Corporation (NASDAQ:SPWR)

SunPower investors had much to celebrate at the company's annual shareholder meeting this afternoon. After spiking an additional 7.2% today to close at $31.48, SPWR shares are now up nearly 19%% week-to-date. Giving the stock a boost was yesterday's bullish initiation at Brean Capital, along with this morning's upgrade to "buy" from "neutral" at BofA-Merrill Lynch. Plus today, SunPower announced it is teaming up with Google Inc (NASDAQ:GOOGL) to create a $250 million program to finance residential rooftop solar systems. In response to the news, speculators overcrowded SPWR's options pits, trading more than three times the expected daily amount of contracts. To be more specific, call volume arrived at roughly 16,000 contracts, compared to put volume of about 12,000 contracts. However, considering 37.1% of the equity's float is sold short, some of this heavy call activity may be attributed to short sellers hedging against more upside -- or perhaps an earnings-induced pop. SunPower is slated to enter the earnings confessional after tomorrow's closing bell.

Chesapeake Energy Corporation (NYSE:CHK)

After tackling a fresh two-year high of $29.25 this morning, Chesapeake settled with a 2% gain to close at $29.02, and the shares are now positioned 17.4% higher on a one-month basis. Meanwhile, today's total options volume on CHK more than tripled the average daily amount, with calls outnumbering puts by a margin of 5-to-1. This activity reflects a broader trend in the equity's options pits. Chesapeake's top-heavy 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 18.89 ranks higher than all other comparable readings from the past year, indicating calls have been bought to open over puts at an annual-high pace recently. Not to mention, the stock's Schaeffer's put/call open interest ratio (SOIR) comes in at an annual-low reading of 0.36, demonstrating short-term speculators are more call-heavy now than they have been at any other time this year. Of note, however, short interest on CHK represents roughly seven sessions' worth of pent-up buying demand, at the shares' average pace of trading, meaning some of this heavy call activity could have come at the hands of short sellers hedging against extended gains.

Illumina, Inc. (NASDAQ:ILMN)

Illumina's strong first-quarter earnings results and subsequent price-target hikes sent the shares 3.9% higher to close at $153.69. Needless to say, options activity on ILMN skyrocketed today, with total options volume more than tripling what is typically traded on a daily basis. Calls and puts changed hands at a neck-and-neck pace. On the call side, it is possible short sellers were responsible for some of the heavier-than-usual activity. Currently, short interest accounts for 18% of ILMN's available float, which is equivalent to nearly nine sessions' worth of pent-up buying demand, at the stock's average daily volume.

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