Canadian Solar Inc. (CSIQ) Options Pop as Solar Stocks Slump Post-Trump

Canadian Solar Inc. (NASDAQ:CSIQ) is spiraling with its sector peers in the wake of Donald Trump's shocking presidential victory

Nov 9, 2016 at 10:25 AM
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Solar stocks are taking it on the chin, after Donald Trump -- a vocal supporter of the fossil fuel industry -- was victorious in the U.S. presidential election. While the Guggenheim Solar ETF (TAN) was last seen down 5.2% at $17.87 and fresh off a three-year low of $16.93, sector component Canadian Solar Inc. (NASDAQ:CSIQ) has plunged 7.2% at $12.34 -- hitting a three-year low of $10.25 out of the gate. With CSIQ stock short-sale restricted, options volume is soaring -- with the contracts crossing at three times what's typically seen this early in the day.

And while volume is still light on an absolute basis -- only 1,253 contracts have traded so far, versus an expected intraday amount of 410 -- a number of traders are betting on even lower lows for the solar stock. Specifically, CSIQ's November 10 put is seeing action in early trading, and it looks as if new positions are being purchased. CSIQ stock hasn't traded in single digits since June 2013.

More broadly speaking, speculative players are more put-skewed than usual among options set to expire in three months or less. CSIQ's Schaeffer's put/call open interest ratio (SOIR) of 1.12 ranks just 1 percentage point from a 52-week peak. Drilling down on the front-month series, peak open interest is located at the stock's November 13 put, with 5,181 contracts outstanding. At least some of these positions were bought to open recently -- per Trade-Alert -- suggesting today's move could be getting a welcome reception.

Looking at the charts, today's negative price action is just more of the same for Canadian Solar Inc. (NASDAQ:CSIQ). Heading into today's trading, the solar stock was already down 54% year-to-date, and hasn't traded north of its 200-day moving average since Jan. 6. Nevertheless, this morning's plunge appears to have found a technical foothold near $12 -- a region that contained a late-September pullback.

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