Unusual Options Activity: Plug Power (PLUG)

Shares of electric mobility company Plug Power (PLUG) have generally been in a decline over the past year. However, one trader sees the possibility for a major move higher ahead.

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  • That’s based on the March 11 $28 calls. Expiring in 15 days, 5,844 contracts traded compared to an open interest of 148, for a 39-fold rise in volume. The buyer of the calls paid $0.22 to make the trade.

    Shares of the stock recently traded close to $21, so shares would need to rally over 28 percent for the option to move in-the-money before expiration.

    The company is still in its early stages, so it’s not profitable. And with interest in electric vehicle stocks waning over the past year, it’s no surprise that shares have dropped 56 percent.

    Action to take: The company does look oversold, and for its prospective future growth, shares could be in for a strong rally. An improving market sentiment in the next few weeks could also help. Shares look like an interesting speculation here, likely with double-digit upside from current prices.

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  • For traders, the option looks interesting. If markets have a strong rebound before expiration, traders could likely get mid-to-high double-digit growth. And while there isn’t much time on the option, it’s cheap enough that even if it doesn’t work out, losses would be small.

     

    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 of the companies mentioned in this article.

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