SolarCity Corp (SCTY) Traders Target Short-Term Gains

SolarCity Corp (SCTY) will lay off over 550 workers in Nevada

by Alex Eppstein

Published on Jan 6, 2016 at 12:09 PM
Updated on Jun 24, 2020 at 10:16 AM

SolarCity Corp (NASDAQ:SCTY) has given up early gains, last seen down 0.3% at $50.28, after the company announced plans to cut at least 550 jobs in Nevada following a recent decision to reduce payouts to customers selling power back to the grid. Based on what we're seeing in the stock's options pits, though, at least one group of traders thinks the shares have room to run by week's end.

Diving right in, the most active SCTY option is the weekly 1/8 52-strike call, with over 1,100 contracts exchanged. It looks like speculators are purchasing fresh positions here, anticipating the stock will muscle atop $52 by Friday's close, when the weekly series expires. However, SCTY has closed just one week atop this mark, dating back to mid-August -- as such, delta is just 0.36, or 36%.

Call buyers have been pretty active in recent months at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). SCTY's 50-day call/put volume ratio checks in at 1.62 -- outstripping nearly four-fifths of comparable readings from the past year. If that's not enough, 11 of 13 analysts rate the shares a "buy" or better, with not a single "sell" recommendation in sight.

That's a lot of optimism for a stock that's just a hair above its year-over-year breakeven level. Should SolarCity Corp (NASDAQ:SCTY) fail to meet these sky-high expectations, an unwinding of optimism could lead to headwinds.



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