Back in our Dec. 1 post "Pacific Crest's Bachman on SunPower - Buy Equal Parts SPWRA and Antacid (SPWRA)" I said:
Although it popped yesterday and is up another dollar today, Sunpower has been a miserable performer the last few months, what with the accounting issues. I don't think it has washed out quite yet and see no reason to chase it. Last trade $21.68, up $1.01....The stock hit an all-time low on Tuesday.
If the market were to head south Sunpower could double the market's loss, there are better plays.
From Schaeffer's Research:
Put players pounced on SunPower Corporation (SPWRA) on Wednesday, as the shares of the solar concern tumbled to a record low. The equity was likely responding to rival First Solar's (FSLR) pending $285 million acquisition of NextLight Renewable Power LLC, which includes a 1,100 MW project pipeline expected to "complement [the company's] project portfolio," according to Chief Executive Rob Gillette.
By the closing bell, SPWRA saw roughly 7,900 puts cross the tape, more than quadrupling its expected daily volume of fewer than 1,900 puts. However, digging deeper into the data indicates that a healthy portion of yesterday's put traders weren't necessarily bearishly biased toward the stock.
The security's now-near-the-money June 16 put was most active, with close to 3,300 contracts exchanged. Put open interest at the back-month strike swelled by almost 3,000 contracts overnight, confirming our suspicions of newly added positions. However, 96% of the puts changed hands at the bid price, suggesting they were likely sold.
By selling to open the June 16 puts, the writers are expecting the shares of SPWRA to remain north of the $16 level through June options expiration. In this best-case scenario, the sold puts will expire worthless, allowing the traders to pocket the premium received at initiation, which represents the maximum potential reward on the play....MORE