Are Options Traders Celebrating the Sunedison Inc (SUNE) Pop?

Sunedison Inc (NYSE:SUNE) option bulls have been active lately

Dec 2, 2015 at 11:54 AM
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A day after surging amid a sector-wide rally, solar energy stock Sunedison Inc (NYSE:SUNE) is on the move again. The shares have gained 4.9% to hit $3.66, after the company announced it will not fulfill an agreement to acquire a stake in Brazilian energy firm Renova Energia. Still, despite this week's gains, the stock sits almost 82% lower on the year. 

Looking at the stock's sentiment backdrop, option traders might be pleased with today's pop. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SUNE has amassed a 50-day call/put volume ratio of 3.15. This reading is only 7 percentage points from an annual high, meaning call buying has been much more popular than usual in recent weeks.

In fact, call volume yesterday surged to nearly double the norm, and it looks like traders bought to open the December 3 call. Open interest at the strike grew by nearly 11,000 contracts overnight, and the strike is now home to peak call open interest in the front-month series. 

During the past two weeks, though, the December 4 call has attracted the most attention. However, some of the buying at out-of-the-money strikes could be attributed to short sellers hedging their positions. Specifically, over one-third of SUNE's float is sold short, which represents a record high.

Elsewhere, there are still plenty of analysts who have high expectations for the shares. Of the 14 brokerage firms covering Sunedison Inc (NYSE:SUNE), nine call it a "buy" or better. Even more brow-raising, SUNE's average 12-month price-target of $15.68 stands at almost four times current price levels. 

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