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Options traders remain optimistic on SunPower Corporation (SPWR)
An upgrade to "outperform" from "neutral" at Credit Suisse has SunPower Corporation (NASDAQ:SPWR) 7% higher today at $27.30. As such, calls are crossing at two times what's typically seen at this point in the day, and the stock's 30-day at-the-money implied volatility has popped 7.1%, pointing to escalating demand for near-term contracts. In fact, all 10 of SPWR's most active strikes are calls, with the January 2015 25 and 26.50 strikes leading the way.
Digging deeper, it appears most of the contracts crossing at these strikes are being bought to open, implying that the traders expect the stock to extend today's rally and continue to trade above the respective strikes through this Friday's close, when the contracts expire.
Optimism exists outside of SPWR's options pits, as well, despite the security's long-term technical struggles. Of the 10 analysts covering the stock, seven rate it a "buy" or better. Moreover, its average 12-month price target of $38.73 represents a 41.9% premium to current trading levels.
Despite today's pop, SunPower Corporation (NASDAQ:SPWR) has dropped roughly 10% year-over-year, and has underperformed the broader S&P 500 Index (SPX) by nearly 19 percentage points in the past three months. In fact, the equity has spent the past six months embarking on a series of lower highs and lows, and has given up more than 35% since touching a five-year high of $42.07 in late June.