Put Players Pounce as Yingli Green Energy Bucks the Broad-Market Trend

Andrea Kramer (akramer@sir-inc.com)

The shares of Yingli Green Energy Hold. Co. Ltd. (YGE) have bucked the broad-market trend into the black today, with the stock giving up 1.1% to flirt with the $10.40 level, at last check. As a result of the stock's defiance, YGE has attracted a slew of put speculators, with almost 4,100 puts already exchanged today ? more than six times its expected daily put volume.

Most popular have been the in-the-money December 12 and June 11 puts, which have each seen about 2,000 contracts cross the tape. While all of the front-month puts have traded at the ask price, suggesting they were bought, most of the longer-term puts have changed hands at the bid price, pointing to seller-initiated activity. However, with put open interest still exceeding volume at both strikes, we can't yet determine how much of today's action will translate into freshly opened bearish (bought to open) or bullish (sold to open) bets, and how much consists of profit taking (sold to close) among the pessimists.

Sentimentally speaking, today's preference for YGE puts merely echoes the growing trend in the options arena. The stock's 10-day International Securities Exchange (ISE) put/call volume ratio of 6.72 implies that traders during the past two weeks have bought to open almost seven YGE puts for every call. What's more, this ratio ranks in the 97th percentile of its annual range, indicating that speculators on the ISE have rarely initiated bearish bets over bullish at a faster clip.

Elsewhere on the Street, short sellers have also ramped up their bearish exposure on YGE. Short interest on the equity spiked by 17.7% during the most recent reporting period, and now accounts for 10 million YGE shares, or 10% of the stock's total available float. In fact, at the equity's average pace of trading, it would take about three sessions to repurchase all of these pessimistic positions.

Technically speaking, it's not difficult to decode the escalating skepticism surrounding the solar concern, which has underperformed the broader S&P 500 Index (SPX) by 25% during the past 40 sessions. Now, the shares are attempting to maintain their perch atop the $10 level, which hasn't been violated on a weekly closing basis since June.

View the original article here