Options Activity for JA Solar Holdings Co., Ltd. (JASO) and Sohu.com Inc. (SOHU)
Wednesday, September 08, 2010
I hope that your trading is going well, as I know that members of S.O.M.E. are making the most of the market movements and their returns.
Today’s newsletter looks at JA Solar Holdings Co., Ltd. (JASO) and Sohu.com Inc. (SOHU), where option volume is unusually heavy. While the solar stock is catching a major boost from its increasingly rosy fundamental outlook, the Chinese Internet issue is drawing notable call activity on the heels of unsubstantiated takeover talk.
JA Solar Holdings Co., Ltd. (JASO)
Just one day after hiking its 2010 shipment guidance, JASO has rallied more than 10% today to tap a new annual high of $7.20.
This morning, the company announced 2011 solar cell supply agreements totaling 500 megawatts, and total option volume has spiked to 11 times the norm as a result. Calls are particularly popular, with volume of 9,133 contracts easily outpacing JASO's predicted daily call activity of about 560 contracts.
Most active is JASO's September 7.50 call, where 2,783 contracts have traded. About 57% of these have changed hands at the ask price, suggesting a bias toward buying activity. This is a deviation from the norm for JASO; as the stock has more recently garnered bearish attention from options players. Bears could find themselves scrambling for the exits sooner rather than later, though. Now that JASO has gapped above resistance in the $6.60-$6.80 region, this area could switch roles to act as a floor.
Sohu.com Inc. (SOHU)
Meanwhile, SOHU is just fractionally higher this afternoon -- but the shares have seen a sizable increase in option volume, with 21 times the usual number of calls crossing the tape. More than 8,000 calls have traded so far, with 4,318 changing hands at the out-of-the-money September 55 call. With 63% of those September 55 calls trading at the ask price, it looks like most of the day's volume is buyer-driven.
Buyout chatter seems to be driving the atypical interest in SOHU's calls, with unsubstantiated rumors suggesting that Baidu.com (BIDU) is a potential suitor for the company. However, SOHU's gains have so far been capped by resistance at its 50-week moving average and the $52 region.
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