Options Traders Target Solar Sector

SEDG stock is surging ahead of earnings

Feb 19, 2020 at 3:18 PM
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A number of solar stocks are moving higher today, and options traders are moving in. Starting with Canadian Solar Inc. (NASDAQ:CSIQ), the stock is trading up 5.5% at $24.80, trading at its highest point in almost a year following news the company is selling a plant in Japan for $205 million, and calls are crossing at 19 times the pace expected for today. This is due to huge activity at the July 28 call, where more than 16,600 contracts have traded, more than three times the next closest option.

Those opening positions here are either buying to bet on upside, or selling to set a ceiling at the $28 mark for CSIQ shares. The stock hit a 52-week low near $15 toward the end of 2019, but has gained more than 64% in the past three months. Coming into today, traders at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) had been betting on more upside, as the 10-day call/put volume ratio stood at 16.27 and ranked in the top annual quartile.

Another solar stock at fresh highs is SolarEdge Technologies Inc (NASDAQ:SEDG), trading up 12.5% at $121.98 ahead of the company's earnings release post-close today. SEDG shares have now gained 183% in the past year, but today options traders are targeting puts. Specifically, about 6,000 contracts have crossed at the March 100 and 120 puts, where multiple spread trades seem to have crossed. There was heavy put trading coming into today at the ISE, CBOE, and PHLX, where the two-week put/call volume ratio of 2.14 ranks in the 95th annual percentile.

Finally, SunPower Corporation (NASDAQ:SPWR) is up 14.3% at $10.53, bouncing sharply from yesterday's pullback to the 50-day moving average. Calls are crossing at four times the expected rate, and there appears to be buy-to-open activity at the February 10.50 calls, which expires at the close this Friday. Outside the options pits, short sellers have been targeting SPWR, with short interest increasing 9.6% in the past two reporting periods, putting roughly one-fourth of the equity's float in the hands of short sellers.


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