From Schaeffer's...
Solarfun Power Holdings (SOLF)
Those of you who are frequent readers of Nick Perry's Daily
Trading Blog
know that I frequently send Nick what I think is the Biggest! News! Of!
The! Day!... Well, little did I know that Nick actually covers stocks
on his blog (just kidding Nick). Imagine the redness of my face when I
went to Nick's office and asked about a company that I noticed on our Heaviest Call Option Activity filter from yesterday, Solarfun
(SOLF:
chart,
options)
. The red state of my face came not from being a Republican, it came
from embarrassment over the fact that Nick told me he had been covering
SOLF for the past few days on his blog.
Yesterday, Solarfun (what a fun name) rocketed 27% after it
announced that Good Energies (a private investment firm focused on
renewable energy issues) upped its stake in Solarfun to 34.7% from
6.3%. The deal includes the purchase of 50% of the shares held by
SOLF's Chief Executive Yonghua Lu, who will retain a 16.1% stake in the
company.
In today's blog entry on SOLF, Nick notes that maybe he should have found a stronger word than volatile to describe the stock back on Monday. As I am always one to take up a challenge, let's create a word for Nick . . . "superfluvolatile." I like it . . .
I classify the stock as superfluvolatile because it closed the day
before Thanksgiving at $10.26 per share and it is now trading at
$29.02, thanks to a 9-plus-percent jump in trading thus far. In fact,
the past 1.5 trading sessions have seen SOLF add a "beefy" (Nick's word
choice, not mine) 60-plus-percent. On the daily chart below, note that
the stock truly started its ascension after reporting third-quarter
earnings back on November 29. The good news propelled the shares
through the 15 level, which had held them in check since September.
So, let's turn to sentiment on SOLF to see if we can discern if
there are any potential upside catalysts. What's that? Crickets? Pretty
much, as there is a near lack of data for SOLF. Short interest stands
at 2.17 million, the firm's Schaeffer's put/call open interest ratio
(SOIR) is 0.80, and no analysts cover the firm. I find the lack of
analyst rankings interesting, as positive initiations could help push
the stock higher; of course, negative initiations could have the
adverse impact. My guess is that SOLF's activity of the past few
sessions is going to attract some attention from analysts.
Looking over more data, I have noticed that the stock has caught the
attention of options players. SOLF has seen roughly 8 times its normal
daily put activity thus far today. Of course, the past day-plus of
gains have given call players an opportunity to rack up 6.6 times their
daily activity as well. This activity is on the December 25 contract
for both sides of the aisle, suggesting that we may be seeing some
straddle plays.
One aspect about this activity is that it has helped establish the
25 level as potential support, or resistance, depending on the stock's
price. Watch the 25 level for the next few days, it could help keep
SOLF on its run higher, of course, it could also add to the stock's
superfluvolatililty.
Hot Forum Topics
