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What Lies Ahead for SunPower Corporation (SPWR)?

SunPower Corporation's March 31.50 put is popular, though shares are surging

by 3/14/2014 12:19 PM
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Option Brief: SunPower Corporation (NASDAQ:SPWR) is poised to finish today's session in the green, up 1.6% to trade at $32.29. After climbing into four-year-high territory on March 5, the stock has endured some technical turbulence, but looks ready to resume its longer-term uptrend. Still, it seems the equity has its doubters, with puts trading at more than three times the average intraday rate.

About three-fourths of the day's put activity can be traced to the March 31.50 strike. The majority of the contracts exchanged here did so at the ask price, and volume exceeds current levels of open interest, collectively suggesting a healthy portion of the activity was of the buy-to-open variety. Further supporting this theory is data from Trade-Alert, which confirms traders have been creating positions at this strike. With their bearish plays, today's traders are banking on SPWR backpedaling below $31.50 -- territory the stock explored just this morning -- by the close next Friday, March 21, when front-month options expire.

The chances of the March 31.50 put landing in the money over the next week are leaning toward unlikely, as delta on the option sits at negative 0.36. Plus, over the past 12 months, SunPower Corporation's (NASDAQ:SPWR) has climbed an impressive 165.8%, with help from its 20-week moving average, which has served as a firm layer of support since December 2012. Specifically, the trendline has acted as a springboard during the equity's pullbacks, sending the shares to higher highs afterward.


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