Fuel cell system producer Bloom Energy (BE) is up 10% over the past year, far lagging the overall stock market. One trader is betting that shares will trend higher in the coming weeks.
That’s based on the July $18 calls. With 56 days until expiration, 3,976 contracts traded compared to a prior open interest of 127, for a 31-fold rise in volume on the trade. The buyer of the calls paid $1.47 to make the bullish bet.
Shares recently traded for about $16, meaning the stock would need to rise $2, or about 12.5%, in order for the option to move in-the-money. The strike price is near the stock’s 52-week high of $18.76.
Bloom Energy has struggled in the past year as an alternative energy play. Revenues are down nearly 15%, and the company has been unprofitable.
However, the company has sufficient cash on hand to make it through today’s environment, and shares are expected to turn a small profit in the next quarter.
Action to take: With shares trending higher, Bloom Energy is a momentum play for investors now. More risk averse investors may want to look for a pullback before buying a position.
For traders, the July $18 call is well positioned for mid-to-high double-digit returns in the coming weeks. If the share trend starts to stall out, look to take a quick profit.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.