Options Traders Respond as Sunedison Inc (SUNE) Rallies

SUNE jumped significantly higher in early trading today

Dec 24, 2015 at 11:48 AM
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Solar energy concern Sunedison Inc (NYSE:SUNE) is trading 9.2% higher at $5.89 today, after the company reported it is in talks on a new second lien credit facility. A portion of the new facility, which would be valued at up to $650 million, could be used to repay the existing second lien credit facility.

SUNE has had a rough year so far, falling off sharply in July after a steep rally through the first half of 2015. Since hitting a multi-year low of $2.55 in late November, the shares have managed to gain back some ground, but still sit on a 70% year-to-date loss.

Much of the recent gains have come in response to positive news regarding the company's planned merger with sector peer Vivint Solar Inc (NYSE:VSLR). Traders have also been hoping for solar stocks in general to profit on the agreement reached in the recent Paris climate talks, as well as freshly extended tax credits here at home -- though the shares dipped briefly earlier this week ahead of a decision from the Nevada Public Utilities Commission (PUC).

Near its November low, SUNE appeared to be getting a lot more trader love than it deserved. But this bullish attention has backed off somewhat, even as the stock has managed to outperform the S&P 500 Index (SPX) by nearly 68 percentage points over the past month. A least one brokerage has downgraded its rating on SUNE, and short interest on the security has risen by 37% during the last two reporting periods.

Option traders have remained bullish, however, with Sunedison Inc's (NYSE:SUNE) 50-day call/put volume ratio climbing to 3.76 -- higher than 92% of readings in the last 12 months. Today, calls are outnumbering puts by about 45,000 to 26,000, with total option volume arriving in the 94th annual percentile. 


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