Sunedison Inc (SUNE) Call Players Keep the Faith

Sunedison Inc (NYSE:SUNE) is soaring today, following upbeat comments from the company's CEO

Sep 3, 2015 at 3:10 PM
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Sunedison Inc (NYSE:SUNE) has been on a downward spiral since topping out at a six-year high of $33.45 in late July, down 64% -- and fresh off an Aug. 26 annual low of $8.10. As a result of this steep sell-off, the stock's 14-day Relative Strength Index (RSI) closed last night at 28 -- in oversold territory -- which may be a factor in today's surge.

Specifically, the stock was last seen up 10.8% at $11.96. Also helping buoy the shares are words of confidence from CEO Ahmad Chatila, who said he expects the company to be cash positive by the end of this year or early next. Additionally, SUNE just inked a photovoltaic (PV) panel deal with Brazil's Renova Energia SA, and an executive announced a big share purchase.

Amid the day's bullish bias, call players are piling into the equity's options pits, with the contracts outpacing puts by a nearly 4-to-1 ratio. Most active is SUNE's weekly 9/4 11.50-strike call, where 7,919 contracts have changed hands. It appears the majority of the calls have been bought to open here for a volume-weighted average price (VWAP) of $0.52, making breakeven for the call buyers $12.02 (strike plus VWAP).

More broadly speaking, today's optimism among options traders just echoes the withstanding trend. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 2.65 ranks higher than 63% of all similar readings taken in the past year.

Echoing this is the security's gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.65. In other words, near-the-money call open interest outstrips put open interest among options slated to expire in three months or less. In the front-month series, specifically, a lofty accumulation of call open interest resides just overhead at Sunedison Inc's (NYSE:SUNE) September 14 strike.

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