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Solaredge Technologies Inc (SEDG) Upward Gap Entices Bulls, Burns Shorts

Solaredge Technologies Inc (SEDG) is shrugging off a pair of price-target cuts, thanks to upbeat earnings

Nov 5, 2015 at 2:48 PM
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Solaredge Technologies Inc (NASDAQ:SEDG) has had a rough go of it lately, and an initial 11.7% drop yesterday morning landed it on the short-sale restricted (SSR) list. Although the shares remain SSR, they gapped higher this morning, and were last seen up 31% at $22.50, on the back of a strong earnings report and upbeat current-quarter revenue guidance. This rally -- which has occurred in the face of price-target cuts at Cowen (to $30) and Canaccord Genuity (to $29) -- has option traders going crazy, with intraday volume at seven times the norm.

The two most active strikes this afternoon are SEDG's November 20 and 22.50 calls. Buy-to-open activity is detected at each strike, suggesting both groups of traders foresee additional upside for the shares through the close on Friday, Nov. 20, when front-month options expire. Thanks to today's upside move, delta on the lower-strike call has shot up to 0.80 from 0.30 at Wednesday's close, while delta on the at-the-money option has risen to 0.52 from 0.14.

Short sellers probably aren't liking what they're seeing. During the last two reporting periods, short interest on Solaredge Technologies Inc (NASDAQ:SEDG) ballooned nearly 72%. At present, 11.2% of the stock's float is sold short, which would take almost four sessions to buy back, at its typical trading volumes.
 

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