Options in Play: Canadian Solar, Yingli Green Energy

01/19/2011 3:03 am EST

Focus: OPTIONS

Elizabeth Harrow

Financial Analyst, Schaeffer's Investment Research, Inc.

Options traders have set their sights on Canadian Solar Inc. (CSIQ) and Yingli Green Energy Hold. Co. Ltd. (YGE), with volume ramping up on both alternative energy issues. Calls are active on both CSIQ and YGE, but not all of the day's speculation is bullish in nature.


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Call trading has popped today on CSIQ, with approximately 7,050 contracts crossing the tape so far—easily outpacing the equity's average daily call volume of 642 contracts. The center of attention is CSIQ's February 13 call, where 4,468 contracts have been exchanged—71% at the ask price, indicating they were most likely purchased.

Despite a general lack of news, CSIQ has skyrocketed to a gain of 6.8% today. The shares are extending a short-term rally along the support of their ten- and 20-day moving averages, which have helped CSIQ tally a year-to-date advance of 10.6%. With the solar stock hovering near $14.50, those February 13 calls are already comfortably in the money.

Traders are also favoring call options on YGE, with volume ramping up to eight times the expected level. So far, nearly 6,700 calls have been exchanged, as compared to fewer than 500 puts.


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However, sellers appear to be driving the bulk of the day's call volume. Most active is YGE's January 2011 11-strike call, with 2,535 contracts crossing the tape, and the stock's February 12 call, with 1,227 contracts changing hands. The majority of these calls have traded at the bid price, indicating they were most likely sold.

Like sector peer CSIQ, YGE has gained more than 6% in the Tuesday session. Unfortunately, though, the equity's momentum has so far been capped by its 32-week moving average, which is located just north of $11.

By Elizabeth Harrow, contributor, Schaeffer’s Trading Floor Blog

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