SolarCity Corp (SCTY) Stock, Call Volume Soar

SolarCity Corp (NASDAQ:SCTY) call options have suddenly become popular

Josh Selway
Jun 15, 2016 at 2:14 PM
facebook twitter linkedin


Call buying has surged in popularity recently on alternative energy stock SolarCity Corp (NASDAQ:SCTY). The stock's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) has nearly tripled since the start of the month, and the current reading of 1.03 suggests call options have a slight advantage over put options. This is rather surprising, since SCTY's options pits have long been shrouded in bearish sentiment

Nonetheless, call buying remains popular today. Call volume is running at twice the normal intraday rate, putting it in the 88th annual percentile. Most of SCTY's options activity has revolved around the 25 strike, with spread activity in the June and July series.

Speaking more generally, any SCTY call buying could always be connected to the stock's elevated short-interest levels. Currently, a whopping 38% of the stock's float is sold short, or roughly five times SCTY's average daily trading pace. Put simply, short sellers may be using call options to hedge their positions

Analysts have high expectations, though. In fact, nine analysts say to buy SCTY, and none recommend selling it.  Also, the stock's consensus 12-month price target of $29.47 represents a lofty 36% premium to its current perch.

This optimism comes, despite the stock's dreadful 12-month performance -- as it's dropped roughly 62%. What's more, SolarCity Corp's (NASDAQ:SCTY) 10- and 20-week moving averages have stiffly blocked the stock's recent breakout attempts. Today, though, SCTY is up 5.4% at $21.62. It's unclear what's causing the pop, but it may be connected to fellow Elon Musk stock Tesla Motors Inc (NASDAQ:TSLA), which is also sharply higher.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners