Is More Upside Ahead for Canadian Solar Inc. (CSIQ)?

Canadian Solar Inc. is soaring today amid some well-received M&A news

Feb 3, 2015 at 10:38 AM
facebook twitter linkedin


Solar stocks had a huge day on Monday, and Canadian Solar Inc. (NASDAQ:CSIQ) was no exception. The equity is extending this momentum today -- up 20.5% at $25.70 -- following news the company is purchasing San Francisco-based alternative energy issue Recurrent Energy from Sharp for about $265 million in cash. Options traders are responding in kind, scooping up calls at a rate 12 times the average intraday pace.

One of CSIQ's most active options is the weekly 2/6 25-strike call, which is being bought to open as speculators gamble on additional gains through week's end -- when the series expires. Thanks to today's surge, delta on the call has jumped to 0.63 from 0.035 at last night's close, indicating a greater probability of an in-the-money finish.

From a wider sentiment perspective, bearish traders have been targeting CSIQ of late. For starters, the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.69 ranks in the 96th annual percentile, meaning puts have been bought to open over calls at a near-annual-high clip. Plus, short interest surged 11.1% over the past two reporting periods, and now accounts for 14.4% of the stock's available float.

This pessimistic positioning isn't too surprising, given the equity's longer-term technical trajectory. In fact, heading into the week, CSIQ had lost half its value since hitting its most recent high of $41.12 in early September. Should the shares extend their recent rally, though, a capitulation from some of the weaker bearish hands could help propel Canadian Solar Inc. (NASDAQ:CSIQ) higher.

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Master Portfolio Trial
 


 


 
Special Offers from Schaeffer's Trading Partners