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Early Edge: Bally Technologies, CardioNet, AOL, and SunPower Corporation

The gaming concern announced the sale of its Mississippi casino

by 4/6/2010 9:28:55 AM
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AOL, Inc.

AOL, Inc. (AOL) is entertaining bids for its instant-messaging service ICQ, according to reports hitting the Street this morning. Business daily Vedomosti notes that DST and ProfMedia of Russia, as well as Tencent of China, have submitted binding offers to acquire AOL's ICQ assets. The business has been valued at up to $300 million, but none of the companies involved are offering an official statement on the speculation.

AOL has added roughly 1% in electronic trading, adding to its 2010 gain of 12.3%. By contrast, the broader S&P 500 Index (SPX) has climbed just 6.5% year-to-date.

However, not many option traders are betting on AOL's uptrend to continue during the short term. Peak call open interest for the April series consists of 16,032 contracts at the 26 strike, all of which are currently right at the money. As a result, the stock likely won't have to face options-related pressure as it attempts to journey higher.

SunPower Corporation

JPMorgan resumed coverage of SunPower Corporation (SPWRA) this morning with an "underweight" rating, down from its prior "neutral" opinion. "SunPower's [average selling price] premium continues to creep higher, but we see this trend reversing in [the second half of calendar year 2010] as demand shifts away from Germany," wrote the firm in a note to clients.

SPWRA has slipped 0.6% ahead of the open, widening its dismal year-to-date deficit of 19.4%. Since late October, the stock has trudged consistently lower under the double-barreled pressure of its 10-week and 20-week moving averages.

Traders have shown a preference for call options on SPWRA in recent months, with the stock sporting a 50-day ISE/Chicago Board Options Exchange (CBOE) call/put volume ratio of 2.40, in the lofty 78th annual percentile. However, with a noteworthy 39% of SPWRA's float sold short, it's likely that some of these calls were purchased only to hedge short stock positions.

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