Options Check-Up: Keurig Green Mountain, SolarCity, and SunPower

Analyzing recent option activity on GMCR, SCTY, and SPWR


Published on Nov 18, 2014 at 8:10 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are coffee concern Keurig Green Mountain Inc (NASDAQ:GMCR), as well as alternative energy companies SolarCity Corp (NASDAQ:SCTY) and SunPower Corporation (NASDAQ:SPWR). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on GMCR, SCTY, and SPWR.

  • GMCR finished Monday 0.2% higher at $154.50 -- and has more than doubled in value in 2014 -- amid news that the company's cold beverage system could debut by spring 2015. Separately, the president of Keurig Green Mountain Inc's Canadian unit described allegations of anti-competitive practices as "without merit." Looking ahead, the firm will step up to the earnings plate after the close on Wednesday. Meanwhile, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), bearish betting has picked up on GMCR. The stock's 10-day put/call volume ratio across this trio of exchanges is 0.98, which ranks in the 81st percentile of its annual range. However, it's possible some of these bearish wagers were initiated by shareholders looking for a downside hedge ahead of the aforementioned earnings release. Regardless, those hoping to pick up short-term bets on GMCR can now do so at a relative discount. The equity's Schaeffer's Volatility Index (SVI) of 45% sits below nearly two-thirds of all readings from the past year, suggesting GMCR's near-term options are pricing in lower-than-usual volatility expectations.

  • SCTY added 1.1% yesterday to close at $53.59, but remains nearly 6% lower on a year-to-date basis. More recently, the shares have underperformed the broader S&P 500 Index (SPX) by almost 27 percentage points during the last three months. Nevertheless, traders have been placing upside bets in recent weeks, per SolarCity Corp's 10-day ISE/CBOE/PHLX call/put volume ratio of 3.04, which rests in the 82nd annual percentile. Meanwhile, the stock's SVI of 53% is lower than four-fifths of all similar readings taken in the previous 12 months, indicating short-term bets can be had at a relative bargain.

  • Finally, SPWR slipped 0.4% on Monday to settle at $27.40, and since hitting a five-year high of $42.07 in late June, the stock has tumbled about 35%. Contributing to yesterday's struggles was yet another price-target cut -- this time, to $31 from $38.50 at UBS, which also reiterated its "neutral" rating. In options land, bearish betting has reached an annual extreme, based on SunPower Corporation's 10-day ISE/CBOE/PHLX put/call volume ratio of 3.01 -- which outstrips all similar metrics from the past 12 months. Meanwhile, the cost of the stock's short-term options is relatively muted right now, per SPWR's SVI of 48% -- in the 29th percentile of its 52-week range.

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