Shares of solar company Sunnova Energy International (NOVA) are down over 50 percent from their recent peak. However, one trader sees the possibility for a strong rebound in the coming months.
That’s based on the April $35 calls. With 118 days until expiration, over 15,000 contracts traded hands, a 90-fold surge in volume from the prior open interest of 155. The buyer of the calls paid $2.63 to make the trade.
The Houston-based solar company saw shares surge to a high of nearly $58 at the start of the year, and got a slight uptick when the latest government infrastructure bill, which was heavy on tax benefits for solar companies, traded. However, shares have since come back down.
Revenue is up 37 percent over the past year at the company, although the firm is still deeply unprofitable.
Action to take: Shares could potentially rebound from here, and the company’s debt load makes it leveraged enough to have some big swings on a move higher in the solar energy space. Investors aren’t being paid a dividend to wait, however, and the stock may make a better trade than investment, at least until there’s a reversal in the overall downtrend in shares.
For traders, the potential for a quick swing higher in the next few months makes this a compelling trade opportunity. Traders can likely nab mid-to-high double-digit gains in the coming months on a swing higher in the stock.
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.