Options trading in clean-energy stocks, particularly solar companies, jumped on Tuesday as voting began in the U.S. midterm elections. The activity came after a five-month sell-off that had left most companies in the sector down for the year. Prediction markets were pricing in a significant Democratic victory, while traders were positioning in stocks often viewed as potential beneficiaries of left-leaning leadership.
Trading volume in the Invesco Solar ETF (TAN) reached 40 times its usual level, according to Cboe LiveVol data. The fund, which had averaged fewer than 500 contracts a day over the previous month, saw more than 20,000 contracts traded by midday, with calls accounting for 99% of the total.
The most popular TAN trade was a December call with a $50 strike, bought for 80 cents, according to SpotGamma data. The position would require the ETF to rise 17%. Calls with $46 and $47 strikes were also popular for nearer expirations.
SolarEdge Technologies was on pace for three times its average trading volume, with calls making up more than 75% of activity. The company was due to report earnings before the market opened the following day, and its shares rose more than 6% on Tuesday. The most popular options trade was a $35 call expiring Friday.
Enphase Energy also drew bullish options activity. Its shares had fallen 20% after reporting earnings the previous week, but had since recovered those losses and gained 9% on Tuesday. Trading volume was twice the average, with traders appearing to buy about 8,600 calls compared with fewer than 900 puts.
The most popular Enphase position was a $35 call expiring in January. It cost $2.45 per contract and would require the shares to rise 23%.
Sources: CNBC Markets.