Will SunEdison shine in earnings?
Traders are looking for strong numbers when SunEdison reports earnings next week.
optionMONSTER's Heat Seeker tracking system detected heavy buying yesterday in the Weekly 21 calls that expire on Nov. 7, the day after the company announces quarterly results. About 7,500 of those calls traded for $0.45 to $0.71 in volume that dwarfed the previous open interest of 352 contracts, showing that these are new positions. The activity was cited by optionMONSTER co-founder Pete Najarian on CNBC's " Halftime Report " yesterday.
These long calls lock in the price where investors can buy stock, which lets them position for a rally at limited cost. That can be safer than purchasing shares directly because only the value of the options can be lost on a pullback. The calls can be sold anytime before they expire but will lose value if the stock price falls. (See our Education section)
SUNE rose 1.93 percent to $19.06 yesterday. The solar-energy company has rebounded sharply since falling to $14 with the market selloff two weeks ago, but the stock has faced resistance at its 200-day moving average.
Yesterday's call buying pushed total option volume in the name past 33,000 contracts, more than 60 percent higher than its daily average for the last month. Overall calls outpaced puts by more than 2.5 to 1.
Disclosure: Najarian owns SUNE calls.
(A version of this post appeared on InsideOptions Pro yesterday.)
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