This Solar Stock is Ripe for a Short Squeeze

The 160-day moving average successfully contained the stock's latest pullback

Research Dept.
Jul 10, 2018 at 10:09 AM
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Alternative energy name Solaredge Technologies Inc (NASDAQ:SEDG) has vaulted up the charts lately, adding 43% in 2018 and more than doubling in the past 12 months. The shares set a record high of $70.73 on May 14, but have since worked off their overbought status. With the stock's pullback successfully contained by its 160-day moving average, now looks like a good opportunity to join SEDG on its next leg higher.

WT Series SEDG

The solar name is ripe for a short squeeze. Short interest has jumped 85% in the past two reporting periods, and the 6.67 million shares sold short represent nearly 24% of SEDG's total available float.

The equity could find an added layer of options-related support around the $50 level, where heavy accumulations of put open interest are located in the July and September series. Echoing this skew toward puts over calls, SEDG's Schaeffer's put/call open interest ratio (SOIR) of 1.76 ranks in the 90th percentile of its annual range.

SEDG's options are attractively priced at the moment, as well. The equity's Schaeffer's Volatility Index (SVI) of 52% ranks in the 23rd annual percentile, meaning short-term options are pricing in relatively low volatility expectations. Further, its Schaeffer's Volatility Scorecard (SVS) of 93 out of a possible 100 indicates the equity has regularly exceeded the volatility expectations priced into its options.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this SEDG commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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