Short Interest Heats Up on SunPower Corporation (SPWR)

SPWR saw short interest increase 45% during the last two reporting periods

by Kirra Fedyszyn

Published on Dec 30, 2015 at 9:00 AM
Updated on Jun 24, 2020 at 10:16 AM

Solar energy stock SunPower Corporation (NASDAQ:SPWR) has gained 18.2% year-to-date, ending Tuesday at $30.53. The stock has been working its way back from August's two-year low of $18.25, most recently gapping above its 180-day moving average -- which has alternately served as both support and resistance this year -- for the first time since June.

SPWR shares have been boosted by the recent climate talks in Paris, which ended with an international agreement many believe will lead to more alternative energy use, as well as an extension of tax credits built into the latest federal budget deal. The stock also got a price-target hike to $28 from $23 at Janney last week.

Analysts have been optimistic about SPWR's prospects, with 10 out of 13 maintaining a "buy" rating or better, without a "sell" to be found. And option traders seem to agree; at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 5.38 indicates more than five calls have been bought to open for each put over the past couple of weeks. What's more, this ratio is higher than 94% of all comparable readings in the last 12 months.

Short-term traders are telling the same story. SPWR's Schaeffer's put/call open interest ratio (SOIR) of 0.51 shows a nearly 2-to-1 preference for calls over puts among options expiring in the next three months. This reading arrives in the 19th annual percentile, indicating a stronger-than-usual preference for calls over puts among speculators.

But some traders are expecting the security to tumble. Short interest on SPWR spiked 45% during the last two reporting periods, and now accounts for more than 16% of the stock's total available float. However, this increase in selling pressure hasn't stopped SunPower Corporation (NASDAQ:SPWR) from breaking out to six-month highs lately, with its 14-day Relative Strength Index of 66 now approaching overbought territory. Given this backdrop, it's possible that some of the recent SPWR call buyers may actually be short sellers looking to hedge their bets.

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