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Most Active Options Update: Plug Power Inc (PLUG)

Short-term option traders eye end-of-week troubles for Plug Power Inc

by 4/2/2014 2:22 PM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this afternoon is Plug Power Inc (NASDAQ:PLUG).


Plug Power Inc has been on a wild ride on the charts in 2014 -- starting the year around the $2 mark before surging to an intraday high of $11.72 on March 11. More recently, the stock was seen hovering around $7.49, and enjoying a foothold atop its rising 20-day moving average. Against this volatile movement, the equity has managed to tack on a brow-raising year-to-date gain of 383%.

Option traders in today's session, however, are convinced the equity will stumble in the near term, and are initiating long puts, which expire at this Friday's close. The two most popular positions thus far are PLUG's weekly 4/4 7.50- and 8-strike puts, where 8,252 and 5,756 contracts have respectively changed hands. The majority of puts at each strike have gone off on the ask side, implied volatility is up double-digits, and volume easily outstrips open interest. Summing it all up, it appears that bearish bets are being initiated.

The lower-strike puts are being purchased for a volume-weighted average price (VWAP) of $0.34, making breakeven at Friday's close $7.16 (strike minus VWAP). Meanwhile, breakeven for the higher-strike puts is $7.29 (strike, less the VWAP of $0.71). Risk for both sets of put buyers is limited to the initial premium paid.

Option players aren't the only ones taking a skeptical stance toward PLUG. Short interest spiked 14.4% in the latest reporting period, and now accounts for more than one-quarter of the equity's available float. With 22.19 million shares sold short -- the loftiest amount in more than a decade -- PLUG could benefit from a short-covering rally, should it continue to make headway on the charts.

Looking ahead, Plug Power Inc (NASDAQ:PLUG) CEO Andy Marsh hinted in late March that the fuel cell producer will soon announce a partnership with a "global automaker." After reporting it had inked a deal with Wal-Mart Stores, Inc. (NYSE:WMT) on Feb. 26, the stock surged 13%.


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