Options Bulls Abuzz After Plug Power Strikes Deal with Amazon

More than 98,000 calls have been traded already today

Deputy Editor
Aug 25, 2022 at 12:14 PM
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The shares of Plug Power Inc (NASDAQ:PLUG) are up 5.8% to trade at $29.11 at last check, following the company's new agreement with Amazon.com (AMZN). The hydrogen fuel cell provider just inked a deal to supply Amazon with green liquid hydrogen for some of its its transportation and building operations, with the arrangement set to begin in 2025. 

Just ahead of the session's halfway point, more than 98,000 calls have already exchanged hands in PLUG's options pits. That's good for quadruple the intraday average, and easily outpacing the roughly 37,000 puts traded so far. The two most popular contracts are the weekly 8/26 32- and 31-strike calls, and new positions are being opened at each. 

Those speculating today are in luck, as the equity sports affordable options at the moment. This is per PLUG's Schaeffer's Volatility Index (SVI) of 71%, which stands in the relatively low 21st percentile of annual readings, implying options traders are pricing in lower-than-usual volatility expectations. What's more, its Schaeffer's Volatility Scorecard (SVS) tally of 93 out of 100 suggests the equity tends to outperform said volatility expectations.

Shorts, meanwhile, are building their positions, meaning there is plenty of pessimism to unwind, which could push the security higher. Short interest rose 7.5% in the last two reporting periods, and the 70.32 million shares sold short account for a healthy 13.6% of the stock's available float.

Today's pop brought PLUG within a hair's breadth of its April 4, annual peak of $32.05 earlier today. While the shares have pulled back slightly over the course of the session, the $29 level has stepped in to contain any further drops and help Power Plug stock maintain a slim 3.7% year-to-date lead. An additional layer of support was found in the equity's 20-day moving average, which caught a notable pullback earlier this month.

PLUG Chart August 25

 

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