JinkoSolar Sees Pre-Earnings Push From Call Traders

The September 20 call has seen a large increase in open interest

Managing Editor
Aug 29, 2019 at 12:03 PM
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Solar panel manufacturer JinkoSolar Holding Co., Ltd. (NYSE:JKS) is moving slightly lower this afternoon, last seen down 0.2% at $19.75. This is a rare occurrence for the shares, as over the past year the stock has tacked on almost 45%. Plus, with help from its rising 160-day moving average and coinciding $18 level, JKS has seen support during its recent dip into territory of lower highs. JinkoSolar is also slated to report earnings before the open tomorrow, Aug. 30, and below we'll take a look at what the options market is pricing in for the shares' post-earnings moves.

Daily JKS with 160MA and Highlight

Digging into JinkoSolar's earnings history over the past eight quarters, the security has closed lower the day after earnings five times -- including the last two in a row -- and a 12.6% plunge in March. This time around, the options market is pricing in a one-day, post-earnings swing of 11.2%, regardless of direction, compared to an average post-earnings move of 7.4% over the past two years.

Data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows JKS with an extremely elevated 10-day call/put volume ratio of 14.26, indicating that more than 14 calls have been bought for every put during the past two weeks on JinkoSolar stock. Plus, this ratio ranks in the 90th annual percentile, signaling a much bigger appetite for bullish bets of late. During this time frame, the September 20 call is seeing the largest increase in open interest, with 2,300 contracts added so far.

Echoing this sentiment is the stock's Schaeffer's put/call open interest ratio (SOIR). Standing at 0.46 and ranking in the bottom 24th percentile of its annual range, this ratio signals a call-skew in the front three-months' series of options.

Short interest on JKS has creeped higher during the most recent reporting period, up 5.4%. This accounts for over 23% of the stock's total available float, and it would take short sellers over two weeks to buy back their bearish bets, at its average pace of trading.

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