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Canadian Solar Inc. (CSIQ) Earnings Catch Option Bears Off Guard

Canadian Solar Inc. is up 10% in pre-market trading, following its quarterly results

by 8/13/2014 9:29 AM
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In the previous two quarters, Canadian Solar Inc. (NASDAQ:CSIQ) has averaged a loss of 11.7% in the session subsequent to reporting earnings. Against this historical backdrop -- and ahead of this morning's second-quarter results -- put volume swelled to four times the average daily pace yesterday.

The most active CSIQ strike was the August 24 put, which was bought to open for a volume-weighted average price (VWAP) of $0.66. As such, breakeven for the put buyers at this Friday's close -- when front-month options expire -- is $23.34 (strike less VWAP). Profit will accrue on a move down to zero, while losses are capped at 100% of the premium paid, should CSIQ finish the week north of the strike price.

Unfortunately for Tuesday's put buyers, Canadian Solar Inc. (NASDAQ:CSIQ) is poised to buck its recent post-earnings price action, after posting a stronger-than-expected earnings report this morning. Additionally, the company upwardly revised its current-quarter shipment forecast. Ahead of the open, shares of CSIQ are pointed more than 10% higher from last night's closing price of $24.97.


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