Unusual Options Activity Alert: China Sunergy Company (CSUN) & Solarfun Power Holdings Co (SOLF)
General Sentiment
This is another relatively quiet day, with averages down slightly and option volume well off recent peaks. By mid-afternoon we have 6.4 million contracts on the tape. Calls are slightly leading puts with an overall bullish sentiment. In addition, the CBOE VIX is at 23.51.
Many traders believe the year-end lull may persist unless major new credit or dollar events develop.
China Sunergy Company (CSUN)
We are seeing unusual bullish activity in options on this Chinese Solar Cell makerís ADRs today. The focus is on the December and January 10 & 15 strike calls.
The stock is trading up 8% to $10.04 and 11,000 calls have traded versus just 1,300 puts. Typical action in this name is fewer than 2,500 contracts per day with calls outnumbering puts 2:1.
Today, 42% of the flow has involved call buyers and put sellers, including a number of aggressive multi-market sweeps. Implied volatility in the December 10 strike has lifted from 100% to 130%, suggesting increased stock swings for the near term.
Solarfun Power Holdings Co (SOLF)
SOLF is up 30% on the day to $26.94 on news of an increased stake by Good Energies. Options volume is approaching 10 times the normal level. As the stock rallied, we saw a consistent buyer in the Dec 25 calls for prices from $1.75 to current levels near $5.50.
A week ago this stock was trading near $11.00. The options flow over the past week suggests some very fortunate insight ahead of the move. On Thursday, we saw more than 5 times the normal options volume as the stock approached $15.00.
Call buyers dominated the order flow, snapping up nearly 2,000 of the Dec 15 calls in the $1.50 price range. The next day, as the stock continued to climb to $17.00, nearly 1,500 more contracts traded in the $2.70 range.
Today those calls traded for $11.00, providing a healthy short-term scalp for a few fortunate traders. Both of these firms are involved in an industry conference taking place tomorrow. This could provide analysts and traders with additional headlines to digest.
Posted By: Trade Alert
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About Henry Schwartz
Henry Schwartz has traded derivatives on US and European exchanges for nearly 20 years. His experience includes market-making and institutional trading at the Hull Group, Salomon Brothers, Bear Stearns and most recently Banc of America Securities, where he led the electronic market-making project coincident with the launch of the ISE. His current work involves real-time stream analysis of options market activity for a number of leading institutional sell-side firms.
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