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JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) has a history of performing well in the wake of its earnings reports, and today's option traders are betting on more of the same. At last check, JASO calls are trading at more than three times the average intraday rate, and are outpacing puts by a roughly 2-to-1 margin.
Drilling down, buy-to-open activity has been detected at the September 9 put, where 1,606 contracts are on the tape. Based on JASO's present price of $9.37, these calls are just barely in the money. However, in order for traders to profit at the close on Friday, Sept. 19 -- when front-month options expire -- the shares need to be sitting above $9.54 (strike plus the volume-weighted average price of $0.54).
Profit for today's call buyers will accumulate on a move north of here, while losses are capped at 100% of the premium paid, should JASO settle south of the strike at expiration. Considering the stock's Schaeffer's Volatility Index (SVI) of 59% ranks lower than 85% of similar readings taken in the past year, the speculators can rest easy knowing they placed these front-month bets at a relative bargain.
As noted, JASO will take its turn in the earnings confessional ahead of Wednesday's open, and the equity's historical post-earnings price action tends to favor bulls. In fact, despite falling short of analysts' bottom-line estimates in five of the past eight quarters, JASO has averaged a gain of 4.7% in the session subsequent to reporting -- skewed a bit by its single-day 70.4% rally following its May 2013 results.
Elsewhere on the fundamental front, JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) announced upbeat test results of its RIECIUM solar photovoltaic (PV) module. Wall Street is taking kindly to the news, sending shares of JASO up 3.5% this afternoon.