On Monday evening,
Clean Energy Fuels Corp
) CEO Andrew Littlefair promised via Twitter to make a major
announcement on Thursday, helping the stock rise 6.4% yesterday.
Option volume likewise soared in the wake of that tweet,
particularly on the call side, where 13,000 contracts changed hands
on Tuesday -- more than six times the norm, and about five times
the number of puts exchanged. The most popular strike was CLNE's
October 14 call.
Digging deeper, close to 3,000 contracts traded at that strike,
with about two-thirds going off at the ask price, indicating they
were purchased. Open interest at the position gained 2,265
contracts overnight, as well, suggesting a sizeable amount of
buy-to-open activity. The volume-weighted average price (VWAP) for
the trades was $0.26.
Thus, Clean Energy Fuels must reach $14.26 (strike price plus VWAP)
by front-month options expiration in order for Tuesday's call
buyers to begin profiting. From the natural gas concern's current
post at $13.59, that's an advance of roughly 5% into territory not
explored since mid-May. Delta on the call stands at 0.34,
representing a more than 1-in-3 chance the option will finish in
the money at the closing bell on Oct. 18. If the shares stall south
of the strike, the most the traders stand to lose is the premium
At the same time, given CLNE's performance on the charts and
current short interest levels, some of yesterday's call buyers may
actually have been on the lookout for
against an extended rally. At present, 23.8% of the stock's float
is sold short, so there are quite a few bears that could stand to
lose if the stock adds significantly to its meager, year-over-year
advance of 2.1%.
As alluded to earlier, a mysterious tweet indicated that tomorrow
may be an important day for Clean Energy Fuels Corp going forward.
Specifically, the company's top executive remarked, "I promised big
news this week and I'll deliver - just not until Thursday Oct 3.
This article by Alex Eppstein was originally published on
Schaeffer's Investment Research
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