Market News

December 13, 2012  Thu 3:16 AM CT

Suntech Power jumped yesterday but still attracted heavy downside option activity.

More than 9,000 March 0.50 puts traded in a strong buying pattern in the final hour of the session, mostly for $0.15, against open interest of just 71 contracts. Earlier in the day more than 4,500 June 0.50 puts traded in a similar pattern for $0.19 against open interest of 926 contracts, according to optionMONSTER's Depth Charge system.

The put buying isn't tied to any trading in the underlying shares detected by out systems, so this appears to be an outright bearish play looking for this stock to continue to collapse despite yesterday's pop. Given that these options are 50 percent out of the money on a $1 stock, it is unlikely to be hedging on a long position.

STP rose 10.54 percent yesterday, about $0.095, to close just under $1--a level that has been resistance going back to the start of August. Shares of the Chinese solar-technology company were up at $2 into early July and above $4 at the February highs.

Nearly 25,000 STP options changed hands yesterday, compared to the daily average of just 1,108. Puts outpaced calls by 6 to 1.
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