Option Bears Charge These 2 Slumping Solar Stocks

Put buyers targeted JA Solar Holdings Co., Ltd. (ADR) and Trina Solar Limited (ADR) yesterday

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Published on Dec 19, 2014 at 10:40 AM
Updated on Apr 20, 2015 at 5:32 PM

While North American solar stocks rallied yesterday, their China-based peers -- including JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) and Trina Solar Limited (ADR) (NYSE:TSL) -- reeled, possibly due to recent tariff news. Specifically, JASO dropped 3.8%, while TSL skidded to a 7.2% loss. Elsewhere, these stocks' options pits were busy, as the sell-off lured a fresh crop of bearish bettors.

Diving right in, JASO puts crossed at nearly triple the expected single-session rate, with buy-to-open activity detected at the January 2015 8-strike put. Similarly, TSL puts traded at eight times the norm, and speculators may have initiated long positions at the January 2016 5- and 8-strike puts. In other words, Thursday's traders expect the solar securities to move steadily lower through the respective expiration dates.

This preference for puts over calls echoes the withstanding trend for both equities. JASO's 10-day put/call volume ratio of 1.32 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 89th percentile of its annual range. Even more extreme is TSL's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.71, which outstrips all comparable readings from the previous 52 weeks.

Looking at today's charts, both stocks have pared a portion of yesterday's losses. JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) has rallied 2.9% to trade at $7.89, while Trina Solar Limited (ADR) (NYSE:TSL) has tacked on 4% to hover near $8.05. Nevertheless, from a longer-term perspective, the equities are still a respective 14% and 41% lower year-to-date.


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