Options Traders See Volatile Stretch Continuing for JinkoSolar Shares

The last two earnings reactions have been volatile for JKS

Mar 21, 2019 at 10:55 AM
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Alternative energy name JinkoSolar Holding Co., Ltd. (NYSE:JKS) is preparing to report earnings before the open tomorrow, March 22, and we noticed some interesting options data ahead of the release. Specifically, speculators are pricing in a 17.1% swing for tomorrow's trading, which on top of being a large number on the surface, it's even more dramatic considering that JKS has averaged a post-earnings move of just 5.8% during the past eight quarters.

This comes after a volatile stretch for the equity, evidenced by its 120-day historical volatility of 78.7%, ranking in the top annual percentile. Indeed, the last two earnings releases have resulted in extreme moves from the security: a 15.5% jump last quarter, following a 12.2% post-earnings slide back in August.

Historically, call buying has been the norm among those speculating on the solar stock, which could be connected to the extremely high short interest levels. By the numbers, more than 30% of the equity's float is held by short sellers, so the high demand for long calls could be from these bears hedging against an upside move. However, we recently wrote about a notable spike in put buying on JinkoSolar, and now peak open interest resides at the April 16 put, followed by the April 12 put. 

Today, calls and puts are both trading above the expected pace before earnings. The most popular overall is the April 25 call, where new positions are opening -- though most have crossed at the bid price, suggesting these traders could be selling to open the positions. The aforementioned April 16 put is also seeing notable trading, but this could be due sell-to-close action.

Unfortunately for JKS shares, they're feeling the effects of the post-earnings sell-off in sector peer Canadian Solar (CSIQ). At last check, JinkoSolar stock was down 10.6% at at $19.26, testing the support of its 20-day moving average. This comes after the equity yesterday notched its highest close in more than a year.

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