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Put Volume Burns Bright on Clean Energy Fuels

CLNE is deluged by back-month put selling activity

by 2/14/2012 9:58 AM
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Clean Energy Fuels (CLNE - 17.64) saw a rush of put activity on Monday, as more than 7,000 of these options crossed the tape, more than quadrupling the equity's average daily volume. Close to 3,400 puts were exchanged at the near-the-money March 17 strike -- most of them at the bid price, suggesting they were sold. Open interest at this strike surged by 3,183 contracts overnight, so it's safe to say that new positions were opened yesterday. This option is now home to peak put open interest of 3,818 contracts. By selling these puts to open, traders are expecting the stock to remain north of $17 through back-month expiration.

This jump in put activity is unusual for CLNE. According to the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 10-day call/put volume ratio of 4.01, confirming that calls bought to open have outnumbered puts by four to one during the past two weeks. However, this ratio ranks in just the 23rd percentile of its annual range, which means that investors have been buying bullish options over bearish at a slower-than-usual pace.

Meanwhile, short interest on the alternative energy concern edged down by almost 1% during the past two reporting periods. Even so, these bearish plays still make up a hefty 23.91% of CLNE's float, implying that some of the recent call volume is the work of short sellers looking to hedge their bets. Either way, it would take more than eight days to buy back these shorted shares, at the stock's average pace of trading.

Technically speaking, CLNE has gained roughly 42% so far this year, and has bested the broader S&P 500 Index (SPX) by close to 29% over the last 40 sessions. On the charts, the stock continues to trade well above its 10-week moving average, which has acted as support since mid-December.

In the first hour of the session, the equity is up about 1.5% and is trading at $17.64.


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