3 Solar Stocks Basking in the Sun

SolarCity Corp (NASDAQ:SCTY), Canadian Solar Inc. (NASDAQ:CSIQ), and First Solar, Inc. (NASDAQ:FSLR) are among today's top solar stocks

Apr 20, 2016 at 2:20 PM
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Solar stocks are on fire today, after several alternative energy and utilities companies proposed an overhaul to New York's energy grid. Among the stocks making the biggest waves are SolarCity Corp (NASDAQ:SCTY), Canadian Solar Inc. (NASDAQ:CSIQ), and First Solar, Inc. (NASDAQ:FSLR) -- each of which has seen significant options trading activity.

SCTY has jumped 10% to trade around $33.31, but options traders are seemingly unimpressed. At last check, puts are changing hands at twice the expected intraday rate, edging out calls. What's more, the two most active strikes -- namely, the May 25 and 32 puts -- are seeing significant buy-to-open activity, suggesting options traders foresee a pullback below the respective strike prices by front-month expiration, at the close on Friday, May 20.

It's far from unusual to see short-term options traders targeting puts over calls. SolarCity Corp's Schaeffer's put/call open interest ratio (SOIR) rests at an annual high of 2.63. This put bias appears to be justified, based on the stock's long-term technical struggles. Even after today's pop, SCTY sits on a year-to-date hole of 35%, and is quickly approaching a potential level of resistance at its 160-day moving average.

CSIQ has tacked on a cool 4.7% at $19.03, but has still surrendered over one-third of its value in 2016. What's more, the solar stock may be approaching double-barreled technical resistance at its overhead 50-day trendline (situated at $19.58) and the round-number $20 level.

Option bulls aren't being deterred, though, as Canadian Solar Inc. calls have changed hands at quadruple the usual intraday rate. In the lead is the October 25 call, where long positions are being initiated as traders foresee a move north of $25 -- territory not charted since early January -- by October expiration. Should CSIQ resume its path lower, an eventual capitulation among these optimists could exacerbate losses.

Finally, FSLR is up 2.8% at $62.22. This could be the start of a more sustained upside move, too, after a period of consolidation at the 160-day moving average. Also, the shares' 14-day Relative Strength Index (RSI) checks in at 36 -- just above oversold territory, which could be contributing to the gains.

Short-term options traders are apparently confident today -- though that hasn't always been the case of late. First Solar, Inc. calls are crossing at 1.3 times the intraday norm, with buy-to-open activity detected at the weekly 4/22 62-strike call. In other words, these speculators think FSLR can build on its momentum through Friday's close, when the series expires. 

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