Enphase Energy Stock Surges on Plans to Join S&P 500

The equity sports a jaw-dropping 585.5% year-to-date lead

Digital Content Manager
Dec 31, 2020 at 10:09 AM
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The shares of Enphase Energy Inc (NASDAQ:ENPH) are up 3.7% at $179.25, at last check, after the clean energy tech name announced it will join the S&P 500 Index (SPX) before the open on Jan. 7, replacing fine jeweler Tiffany (TIF). This marks yet another win for the alternative energy sector, after Tesla (TSLA) joined the same index just a couple of weeks ago.

Enphase Energy stock has experienced unprecedented growth over the past year. Shares have been chopping higher on the charts since mid-March, to ultimately hit a Dec. 28, all-time-high of $189.41. And while the equity has cooled off slightly from those levels, it is still getting support from the ascending 10-day moving average. Year-to-date, ENPH is up a jaw-dropping 585.5%.

Analysts are optimistic toward the security, with 11 of the 16 in question sporting a "buy" or better rating, while the remaining five consider the stock a tepid "hold." Meanwhile, the 12-month consensus price target of $136.19 is a 23.1% discount to current levels. In other words, ENPH has plenty of room for price-target hikes going forward.

And while shorts are already hitting the exits, there is still plenty of pessimism left to be unwound, which could push the security higher in coming months. Short interest fell 5.9% in the most recent reporting period, but the 9.18 million shares sold short make up 7.8% of the stock's available float, or nearly three days of pent-up buying power. 

Drilling down to today's options activity, 15,000 calls have already crossed the tape so far, which is 12 times what is typically seen at this point. Most popular is the January 2021 200-strike call, followed closely by the May 270 call, with new positions being opened at the former.

Now seems like an opportune time to weigh in on ENPH's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 71% sits in the extremely low 9th percentile of its annual range, meaning the equity sports attractively priced premiums at the moment. 

Lastly, the security's Schaeffer's Volatility Scorecard (SVS) stands at an elevated 98 out of 100. This indicates ENPH has exceeded option traders' volatility expectations during the past year -- a boon for options buyers.

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