SolarCity draws bulls before earnings

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SolarCity reports earnings tomorrow, and the bulls don't want to miss a rally.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 6,665 May 60 calls, most of which priced for $1.08. A matching number of May 65 calls was sold for $0.31. Volume was more than triple the previous open interest in each strike.

Known as a bullish call spread , the trade cost $0.77 and will inflate to $5 if the solar-energy stock closes at $65 or higher on expiration. That would represent profit of 549 percent from the underlying shares climbing less than 20 percent. (See our Education section for more on the leveraging potential of options.)

SCTY is down 2.69 percent to $53.98 in midday trading. It roughly tripled between early September and late February, only to drop violently along with other high-flying technology stocks. Earnings and revenue beat expectations the last time results were announced in March, but guidance disappointed. The next quarterly numbers come out tomorrow afternoon.

Total option volume is triple the daily average, with calls outnumbering puts by a bullish 4.5-to-1 ratio.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: SCTY

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