According to CNBC, options activity in clean-energy stocks, particularly solar companies, surged Tuesday as prediction markets priced in a big victory for Democrats in Tuesday’s midterm elections. The activity came after a five-month sell-off that left most companies in the industry group down on the year.
The Invesco Solar ETF (TAN) traded more than 20,000 contracts by midday, about 40 times its usual volume, and 99% were calls. The fund typically traded fewer than 500 contracts a day over the past month. The most popular trade was a December-expiry 50-strike call purchased for 80 cents, targeting a 17% rally.
SolarEdge Technologies was on pace for three times its average volume, with more than 75% of trades in calls, and its shares rose more than 6% Tuesday. The company was scheduled to report earnings before the bell tomorrow. The most popular trade was a 35-strike call expiring Friday.
Enphase Energy shares, which fell 20% after earnings last week, had fully recovered those losses and rose 9% Tuesday. On twice its average volume, traders likely bought 8,600 calls, compared with fewer than 900 puts. The most popular trade was a January-expiry 35-strike call costing $2.45 per contract and requiring a 23% rally.
