Sinking SunPower Corporation (SPWR) a Boon to Bearish Options Bettors

SunPower Corporation (SPWR) hit a nearly three-year low earlier

May 19, 2016 at 3:20 PM
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SunPower Corporation (NASDAQ:SPWR) is spiraling lower along with the broader market, down 6% at $15.29. Earlier, in fact, the solar stock touched a roughly three-year low of $15.24. While this can't be a good day for shareholders, bearish options traders and short sellers alike are reveling in the losses.

Starting on the options front, SPWR's 50-day put/call volume ratio of 0.62 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 72nd annual percentile. In other words, even though long calls outstrip puts on an absolute basis, the pace of put buying has been quicker than usual in recent months.

Echoing this put-skew is SPWR's Schaeffer's put/call open interest ratio (SOIR) of 0.76, which outstrips almost four-fifths of readings from the past year. Said differently, open interest among options expiring in the next three months is more tilted than normal toward puts.

Moving along, short interest on SPWR has been on the decline in recent reporting periods. At the same time, however, over 21% of the solar stock's float is still sold short. At SPWR's typical trading volumes, it would take almost eight sessions to cover these bearish bets.

That's not to say no one has high hopes for SunPower Corporation (NASDAQ:SPWR). In fact, an astounding 85% of analysts rate the solar stock a "buy" or better, with not a single "sell" rating to be found. Moreover, the average 12-month price target of $32.58 is more than double current levels. If the shares can't turn things around quickly, it wouldn't be a shock to see SPWR hit with a round of downgrades and/or price-target cuts.

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