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Option Brief: JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) jumped nearly 13% yesterday on news that the alternative energy concern had achieved 19% conversion efficiency on its multi-crystalline silicon solar cells. Meanwhile, in the options pits, call volume quadrupled the daily average, with more than 13,000 contracts crossing the tape.
The largest increase in open interest overnight occurred at JASO's June 11 call, where more than 2,100 contracts were added. Also, since 79% of the nearly 2,500 contracts traded at the strike changed hands at the ask price, it's safe to assume the out-of-the-money contracts were bought to open.
With JASO moving sharply higher yesterday, the call buyers may have been banking on continued upside for the shares -- specifically, a move north of $11 by June options expiration. However, considering 18.4% of the stock's outstanding float is sold short, it's also possible that the calls were initiated by short sellers to hedge against a potential move higher. No matter what happens, the most the traders can lose is 100% of the initial premium paid.
At last check, JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) had pared a portion of yesterday's gains, off 3% to $10.51. On a longer-term basis, the shares have advanced almost 90% year-over-year.