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Option Brief: Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) is up more than 23% today, after announcing a partnership with Datong Coal Mine Group to build solar power plants in China. In the options pits, overall activity has soared to more than 10 times the typical pace, but calls have easily emerged as the contracts of choice. Meanwhile, against this increased demand for options, YGE's 30-day, at-the-money implied volatility (IV) has jumped 6.2% to 87.2%.
Leading the pack is YGE's March 6 call, which has seen 8,805 contracts -- including several mid-sized blocks -- change hands. The majority of these positions crossed on the ask side, IV is up 6.4 percentage points, and volume is outstripping open interest, pointing to buy-to-open activity. With Yingli trading at $6.23, these calls are currently in the money by a very narrow margin. However, in order for traders to profit, the stock must topple breakeven at $6.74, which is the strike price plus the volume-weighted average price of $0.74.
As noted, YGE is starting the year off on solid footing, and has provided a halo lift to other names within the solar sector. However, this positive price action is nothing new for an equity that doubled in value in 2013. What's more, today's push higher has Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) on track to close the session north of its 60-day moving average for the first time since Nov. 14.