China Buzz Brings Out Canadian Solar Inc. (CSIQ) Bulls

Canadian Solar Inc. (NASDAQ:CSIQ) calls are outpacing puts today by a 2-to-1 margin

Apr 28, 2015 at 1:52 PM
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Canadian Solar Inc. (NASDAQ:CSIQ) is up 5.7% today at $37.68, as alternative energy stocks rally on news that a complaint has been filed with the European Union against Chinese solar panel producers. Options traders are responding well to today's pop, with CSIQ calls trading at three times what's typically seen at this point in the day, and outpacing puts by a 2-to-1 margin.

Drilling down, the stock's June 40 call has seen the most action, where it looks as if buy-to-open activity is occurring. Specifically, it appears new positions are being purchased for a volume-weighted average price (VWAP) of $2.08, making at-expiration breakeven $42.08 (strike plus VWAP) -- territory not charted since March 2014.

Today's option traders are going against the grain, per CSIQ's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.92, which ranks in the 88th annual percentile. Additionally, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.44 rests 1 percentage point below a 52-week peak, meaning short-term traders have rarely been as put-heavy toward CSIQ as they are now.

On the charts, Canadian Solar Inc. (NASDAQ:CSIQ) has been a standout -- doubling in value since hitting an annual low of $18.68 on Jan. 22. As such, it's possible some of the recent put buying -- particularly at out-of-the-money strikes -- could be a result of shareholders protecting paper profits against a pullback.

 

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