Call Traders Blitz Vivint Solar Stock After Sunrun Deal

Sunrun is buying Vivint in a $1.46 billion-dollar deal

Deputy Editor
Jul 7, 2020 at 11:20 AM
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The shares of solar energy concern Vivint Solar Inc (NYSE:VSLR) are soaring today, up 37.4% at $14.60 at last check and one of the best stocks on the New York Stock Exchange (NYSE). The breakout comes after Sunrun Inc (RUN) announced it was buying the Blackstone-backed company for about $1.46 billion in an all-stock deal, with an enterprise value of about $3.2 billion. It will leave Vivint shareholders with about a 36% stake in the merged company, which will control 25% of the residential solar market, according to analysts.

Today's dramatic boost put VSLR at a five-year high of $15 out of the gate. The shares have hurtled past the $13 level, which stymied VSLR highs back in February. The stock has been steadily climbing out of its mid-March lows near $3.20, and is now up 96% year-to-date. 

VSLR July 7

A short squeeze could fuel additional gains. Short interest has been dropping off, down 8.9% during the last two reporting periods. Yet the 15.61 million shares sold short still account for a whole 30.1% of the stock's available float. In other words, it would take nearly eight days to cover at VSLR's average pace of trading. 

Vivint's options pits have exploded today in response to the deal. At last check, over 12,000 calls have changed hands, 32 times the average intraday amount and 13 times the number of puts traded. The most popular July 15- and 14-strike calls, with new positions being opened at each. Buyers of these calls are banking on a sustained rise from VSLR in the next two weeks, when the contracts expire.

Additionally, the security's Schaeffer's Volatility Index (SVI) of 144% stands higher than just 21% of all other readings from the past year, implying that near-term option traders are pricing in relatively low volatility expectations. 

 

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