Options Check-Up: Freeport-McMoran, JA Solar, SunPower

Analyzing recent option activity on FCX, JASO, and SPWR

Digital Content Group
Dec 11, 2014 at 7:51 AM
facebook X logo linkedin


Among the stocks attracting attention from options traders lately are mining magnate Freeport-McMoran Inc (NYSE:FCX), as well as alternative energy concerns JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) and SunPower Corporation (NASDAQ:SPWR). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on FCX, JASO, and SPWR.

  • FCX has been in freefall since its July highs, touching an annual low of $23.95 during yesterday's session, before closing at $23.96, a drop of 4.7%. Hurting the shares was news that FCX agreed to pay additional processing charges to a number of Chinese copper smelters, starting next year. Speculators are hopeful of a turnaround, though, as the equity's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.65 lands in the 85th percentile of its annual range. Simply put, long calls have rarely been bought to open (relative to puts) at a faster pace in the past year. From a volatility perspective, traders are paying a steep price for Freeport-McMoran Inc's near-term options, per its Schaeffer's Volatility Index (SVI) of 39%, which ranks higher than all similar readings taken in the last 12 months.

  • JASO followed the broader market lower yesterday, losing 1.5% to close at $8.75. It's been a lackluster year for the stock, as it's down 4.6%. During the past two weeks, options traders have been betting on the downward trend to continue. At the ISE, CBOE, and PHLX, JA Solar Holdings Co., Ltd.'s (ADR) 10-day put/call volume ratio of 0.20 ranks in its bearishly skewed 73rd annual percentile. The security's short-term options are relatively inexpensive, on a volatility basis, according to its SVI of 62%. Specifically, the number arrives in the 32nd percentile of all similar readings taken in the last 12 months.

  • Finally, SPWR closed 2.8% lower yesterday to finish at $23.77. The equity is now down over 20% year-to-date. Despite the stock's technical struggles, recent activity in SunPower Corporation's options pits has been of the bullish variety. The stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 4.05 is higher than 78% of similar readings taken in the past year. However, considering roughly 20% of the security's float is sold short, some of these bullish positions may have been initiated by short sellers as an upside hedge. Regardless of the motive, SPWR's near-term options are fairly priced, from a volatility perspective, as its SVI of 51% ranks in the 34th percentile of its annual range.

 

Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.


Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!