Markets

Options Update: Buzzer-Beating Bulls Expect a Double-Digit Finish for JA Solar Holdings Co.

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The shares of JA Solar Holdings Co. ( JASO ) soared to a new two-year high today, vaulting past the round-number $10 level for the first time since October 2008. In fact, the solar concern has tacked on more than 9% just this week, extending its recent rally atop its 10-day moving average - a trendline that's contained all but two of JASO's daily closes since Aug. 25.

Daily chart of JASO since August 2010

In light of the stock's surge, it appears a handful of very short-term options traders are betting JASO will finish the week in double-digit territory.

So far today, the security has seen roughly 5,200 calls cross the tape - more than quadrupling its predicted single-session volume of fewer than 1,300 calls. A healthy portion of the action has centered on the October 10 call, which has seen close to 1,200 contracts traded on open interest of fewer than 1,100, pointing to newly opened positions. Furthermore, 83% of the soon-to-expire calls have changed hands at the ask price, confirming our theory of freshly bought bullish bets.

JASO analysts

Despite JASO's impressive technical prowess of late, though, today's affinity for optimistic positions stands in contrast to the pessimistic bias among the near-term options crowd.

More specifically, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.09 indicates that puts outnumber their call counterparts among options with less than three months to expiration. What's more, this ratio stands higher than 78% of all others taken during the past year, suggesting that short-term speculators have been more skeptically skewed toward JASO just 22% of the time.

Elsewhere on the Street, a slew of brokerage firms also remain hesitant to board the outperformer's bullish bandwagon. According to Zacks , the stock still harbors nine tepid "hold" ratings, compared to 10 "buy" or better endorsements. In similar fashion, Thomson Reuters deems the consensus 12-month price target on the security at $10.30 - just a stone's throw from JASO's new high of $10.24.

However, there's nothing contrarians love more than scoping out an uptrending stock surrounded by skepticism, as this often hints at potential buyers still lurking on the sidelines. Should JASO extend its recent journey into the black, a reversal in sentiment in the options pits, or a string of upbeat analyst notes, could add even more fuel to the equity's fire.

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

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