Breaking Down a $2.1 Million Wager on SunEdison, Inc. (SUNE)

A sweep of 5,500 weekly 5/22 26.50-strike calls was purchased by one Sunedison Inc (SUNE) trader

May 22, 2015 at 2:35 PM
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Sunedison Inc (NYSE:SUNE) calls have been in high demand in recent weeks, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The solar stock's 10-day call/put volume ratio checks in at 10.97 -- with nearly 11 calls bought to open for every put. What's more, this ratio rests just 9 percentage points from a 52-week high.

That trend is holding up today, amid SUNE's 3.6% gain to trade at $30.50 -- not to mention, its new six-year high of $30.57. By the numbers, 15,000 calls are on the tape -- nearly tripling the number of puts exchanged.

Digging deeper, the weekly 5/22 26.50-strike call is SUNE's most active option. According to Trade-Alert, one speculator bought to open a sweep of 5,500 contracts at the in-the-money strike, for $3.90 apiece -- or a total of more than $2.1 million (premium * number of contracts * 100 shares per contract). In order to profit at tonight's expiration, the buyer needs the stock to settle above breakeven at $30.40 (strike plus premium paid).

However, not everyone is bullish on Sunedison Inc (NYSE:SUNE). A lofty 36% of the stock's float is dedicated to short interest, which represents 11 times the average daily trading volume. In fact, some of the recent call buying -- especially at out-of-the-money strikes -- could have been at the hands of short sellers seeking upside protection.


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