Sunedison Inc (SUNE) Options Fly Off the Shelves

Sunedison Inc (SUNE) is exploring new lows after a bearish analyst interview

Jan 12, 2016 at 1:44 PM
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Solar concern Sunedison Inc (NYSE:SUNE) is getting slammed -- both on the charts and social media -- with some attributing the slide to a very bearish interview with Axiom Capital's Gordon Johnson. The shares are down 17.2% at $2.77 -- and on the short-sale restricted list -- and earlier hit a three-year low of $2.36 after a brief halt. SUNE options, meanwhile, are crossing the tape at a rapid-fire rate.

SUNE puts have changed hands at nearly twice their average intraday pace, and calls have traded at 1.5 times the norm. The January 2016 3.50-strike call is most active, and it looks like one trader liquidated a losing block of 10,000 calls this morning, per Trade-Alert.

Elsewhere, it seems "vanilla" bears are buying to open the January 2016 2.50-strike put for a volume-weighted average price (VWAP) of $0.18. The buyers' profit will increase the steeper SUNE slides south of $2.32 (strike minus VWAP) -- in new-low territory -- by Friday's close, when the options expire. "Vanilla" bulls are picking up January 2016 4-strike calls at a VWAP of $0.04, meaning they'll make money if SUNE rebounds north of $4.04 (strike plus VWAP) by the end of the week.

From a broader sentiment standpoint, long puts have been all the rage on SUNE. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.99 stands higher than 87% of all other readings from the past year. In simpler terms, SUNE option bears have been more active than usual during the past two weeks.

In fact, there are more than 514,000 SUNE puts open at the moment -- just 2 percentage points from an annual high. That's not to say SUNE call volume has been light, though. Call open interest is at an annual high, with roughly 950,000 contracts outstanding.

Elsewhere, SUNE has been a favorite among short sellers of late. Short interest surged 33.6% during the past two reporting periods, and now accounts for a whopping 45.3% of the equity's total available float.

On the charts, it's no wonder that Axiom's Johnson -- and apparently most of Wall Street -- has doubts about SUNE. The shares have erased nearly 93% of their value since peaking north of $33 in July, and even news of favorable tax credits has failed to spark a sustainable rebound.

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