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Plug Power Inc (PLUG) Traders Eye an Extended Rally

Plug Power Inc is up nearly 8% this morning, sending call volume soaring

by 7/21/2014 10:45 AM
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Plug Power Inc (NASDAQ:PLUG) is bucking the broad-market trend lower today -- up 7.7% at last check on no apparent news. Option traders are responding in kind, scooping up PLUG calls at a rate almost seven times the intraday average. Short-term contracts are in high demand, too, per the stock's 30-day at-the-money implied volatility, which has risen 3.9% to 99.5%.

In fact, eight of the 10 most active PLUG options expire within the next four weeks. With the stock lingering near $5.38, it seems a number of traders are selling to close their weekly 7/25 5-strike calls ahead of this Friday's expiration -- with this strike seeing the most action thus far. Receiving notable attention from option bulls on the opening side, meanwhile, is PLUG's weekly 7/25 5.50-strike call, where 3,607 contracts have changed hands for a volume-weighted average price (VWAP) of $0.19.

Based on the entry price, PLUG needs to be sitting north of breakeven at $5.69 (strike plus VWAP) at the sound of the closing bell on Friday. Gains are theoretically unlimited with each step north of here, while losses are capped at 100% of the premium paid, should Plug Power Inc (NASDAQ:PLUG) settle south of $5.50 at week's end.


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