Energy Stock Takes Breather After Record Run

Put options are running at double their usual volume

Deputy Editor
Oct 8, 2020 at 2:00 PM
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The shares of Enphase Energy Inc (NASDAQ:ENPH) are down 1.2% at $106.51, despite nabbing a record high of $109.90 out of the gate today. Today's volatile price action comes amid a recent spotlight on renewable/clean energy, due to former Vice President Joe Biden's run for U.S. President, given he and his running mate Kamala Harris' focus on the subject. 

If today's losses hold, Enphase Energy stock will snap a torrid 10-day win streak that has already resulted in a 26.7% quarterly gain. Also worth noting, the equity's 14-day Relative Strength Index (RSI) of 82 sits firmly in "overbought" territory, meaning a short-term breather may have already been in the cards. Year-to-date, the stock is up 307.2%, but more gains could come from price-target hikes, considering the 12-month consensus price target of $80.07 sits at a 24.8% discount to current levels. 


Options traders are focused on puts today. So far, 6,449 puts and 5,276 calls have crossed the tape, with put volume running at double its usual pace and in the 92nd percentile of its annual range. Leading the charge is the November 115 put, but there are also new positions being opened at the 100-strike put from the same series.

Options look like a good way to go when weighing in on the renewable energy stock. The security's Schaeffer's Volatility Index (SVI) of 76% stands higher than 13% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment.

Furthermore, the security's Schaeffer's Volatility Scorecard (SVS) sits at a high 99 out of 100. This means the stock has tended to exceed option traders' volatility expectations during the past year -- a boon for options buyers.


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