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Canadian Solar Inc. (CSIQ) Option Bulls See More Gains Ahead

Canadian Solar Inc. shares hit new high, options volume spikes on upbeat news

by 1/7/2014 1:50 PM
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Option Brief: Canadian Solar Inc. (NASDAQ:CSIQ) is booming today, on news that the company will supply National Renewable Energy Corporation with solar modules for four utility-scale solar projects in North Carolina. At last check, CSIQ shares were pointed 8.4% higher at $38.74, after earlier bolting to a five-year high of $39.84. Plus, option volume has spiked on the equity, currently running at more than five times what is typically seen at this time of day.

Many of CSIQ's traders have turned their attention to the January 2014 39-strike call. Digging into the data shows that the majority of the 3,087 contracts traded here went off at the ask price, implied volatility jumped on a number of large and mid-sized block trades, and volume exceeds current open interest levels. In other words, a fresh batch of bullish bets has likely been opened at this strike.

While the calls are now in the money -- thanks to today's gains -- the call buyers will not begin to profit until CSIQ surpasses the breakeven price of $40.85 (strike price plus the volume-weighted average price of $1.85). The stock has until the close on Jan. 17, when front-month options expire, to topple this mark, or else the bullish bettors will forfeit the initial premium paid.

Luckily for today's speculators -- Canadian Solar Inc. (NASDAQ:CSIQ) is a technical powerhouse, already climbing 30% since the start of the 2014. Year-over-year, the equity is looking at a jaw-dropping gain of about 916%.


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