Plug Power Dips, Options Traders Buy Calls And Sell Puts

Plug Power Inc PLUG was trading lower Wednesday morning but by afternoon it looked as though bulls had bought the dip.

The hydrogen fuel cell producer received a downgrade from Canaccord Genuity following its earnings print. Analyst Jed Dorsheimer downgraded the stock from Buy to Hold and cut its price target by more than half from $69 to $31.

Plug Power reported revenue of $72 million, missing the consensus estimate of $76.87, and a quarterly loss of 12 cents, four cents less than the expected loss of 8 cents.

Options traders think Canaccord’s price target may be an overreaction and just after 10 a.m. began purchasing call contacts of the stock. Together they bet $275,960 Plug Power is headed higher.

A number of options traders, who had taken positions prior to Plug Power’s earnings report also closed out their positions and sold over $1.09 million worth of put contracts.

See Also: Plug Power Analyst Drops Bullish Stance, Says Company Needs To Show Profitability Improvements

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into or out of a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into or exited a position.

The Plug Power Call Option Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 10:04 a.m., Wednesday a trader executed a call sweep at the ask of 200 Plug Power options with a strike price of $31 expiring on June 25. The trade represented a $41,800 bullish bet for which the trader paid $2.09 per option contract.
• At 10:09 a.m., a trader executed a call sweep at the ask of 200 Plug Power options with a strike price of $40 expiring on Jan. 20, 2023. The trade represented a $205,000 bullish bet for which the trader paid $10.25 per option contract.
• At 11:34 a.m., a trader executed a call sweep at the ask of 243 Plug Power options with a strike price of $36 expiring on July 16. The trade represented a $29,160 bullish bet for which the trader paid $1.20 per option contract.

The Plug Power Put Option Trades:

• At 9:53 a.m., a trader executed a put sweep at the bid of 1487 Plug Power options with a strike price of $35 expiring on Sept. 17. The trader sold their position for $6.20 per option contract for a total of $921,940.
• At 10:50 a.m., a trader executed a put sweep at the bid of 248 Plug Power options with a strike price of $33 expiring on June 25. The trader sold their position for $1.08 per option contract for a total of $26,784.
• At 11:09 a.m., a trader executed a put sweep at the bid of 796 Plug Power options with a strike price of $29 expiring on July 16. The trader sold their position for 82 cents per option contract for a total of $65,272.
• At 11:39 a.m., a trader executed a put sweep at the bid of 840 Plug Power options with a strike price of $25 expiring on Aug. 20. The trader sold their position for 91 cents per option contract for a total of $76,440.

PLUG Price Action: Plug Power was trading down 2.2% to $33.26 at publication time.

Photo: Plug Power