Another Big Day Brings Out SolarCity Corporation (SCTY) Bulls

SolarCity Corp (SCTY) calls have been bought to open over puts at an extreme pace of late

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Published on Mar 31, 2015 at 2:48 PM
Updated on Jun 24, 2020 at 10:16 AM

Once again, SolarCity Corp (NASDAQ:SCTY) is making a solid move higher. After rallying yesterday on rumors of a potential partnership with Tesla Motors Inc (NASDAQ:TSLA), the alternative energy stock is up another 2.6% at $51.90. As such, options activity is ramping up.

Calls, in particular, are popular -- crossing at nearly triple the usual intraday pace. Short-term traders are targeting the weekly 4/2 52.50 strike, where data points to new positions being purchased. By buying to open these out-of-the-money calls, speculators anticipate SCTY will hurdle $52.50 by this Thursday's close, when the weekly series ceases trading.

Taking a step back, call buyers have been busy of late in SCTY's options pits. The equity's 10-day call/put volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at an annual high of 5.60.

The brokerage crowd is extremely optimistic, too. Seven of eight analysts have handed SCTY a "buy" or better rating, compared to one "hold" and not a single "sell." Even more bullish is the stock's consensus 12-month price target of $84.50, which stands in territory not charted for roughly one year -- and represents a nearly 63% premium to current trading levels.

Technically speaking, though, SolarCity Corp (NASDAQ:SCTY) hasn't been anything to write home about. The shares are down more than 3% year-to-date, and have underperformed the broader S&P 500 Index (SPX) over the past couple months.


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