Plug Power Puts Pop After Common Stock Offering

Plug Power is heading toward its worst day since early March

by Patrick Martin

Published on Dec 3, 2019 at 10:04 AM
Updated on Jun 24, 2020 at 10:16 AM

Penny stock Plug Power Inc (NASDAQ:PLUG) is taking a hit today, down 12.2% to trade at $3.29. This comes in the wake of a public stock offering of 40 million shares, with the intention to use the proceeds to offset capital expenditures. With the stock landing on the short-sale restricted list this morning, options trading has ramped up.

In just the first hour of trading, already 4,400 puts have changed hands, 20 times the average intraday amount and volume already at an annual high. Most of this is occurring at the weekly 12/6 3-strike put, where new positions are being opened.

In recent weeks though, options traders had been almost exclusively focusing on calls. The stock's 10-day call/put volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows more than 10 long calls opened for every put. Given that 22% of PLUG's total available float is sold short, it's possible some of these calls could be shorts hedging against any additional upside. 

Regardless of motive, options might be a good idea for anyone looking to invest in PLUG's next move. The security's Schaeffer's Volatility Index (SVI) of 78% sits in the 9th percentile of its annual range. This means short-term options are pricing in extremely low volatility expectations right now.

While today is pacing to be PLUG's worst single-session drop since March 15, the stock is still up 161% year-to-date, and is fresh off a 47.2% monthly gain from November. Plus, today's pullback appears to have run out of steam at the shares' 20-day moving average.


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