Options Trading News

July 22, 2013  Mon 12:20 PM CT

Solar has been shining bright, and the bulls are piling into SunEdison today.

optionMONSTER's Heat Seeker monitoring system detected the purchase of almost 3,000 October 11 calls, most of which priced for $0.90. Volume was almost twice previous open interest at the strike, indicating that new positions were initiated.

These long calls lock in the price where shares can be purchased in the company, which provides silicon wafers used to make photovoltaic cells. Investors now can rest easy for the next three months, assured they will not miss a continued rally in the name, while also limiting the amount of capital at risk if it moves in the opposite direction. (See our Education section for more on how you to manage trades more effectively with options.)

SUNE is trading at $9.94, up 3 percent on the day and more than 200 percent this year. Sentiment has been brightening toward the solar industry since last summer as investors find value in stocks still trading well below their peaks of the last decade. SUNE, for instance, fetched more than $80 back 2007 and 2008.

Total option volume is twice the daily average so far today, according to the Heat Seeker. Calls outnumber puts by a bullish 7-to-1 ratio.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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