Much has been debated about the valuation of Solar City (SCTY), not to mention the viability of the company.
SOLAR IS HERE TO STAY
However, we should understand that solar energy is here to stay and may be the next big growth driver in the energy space. It’s not just the U.S., either. Europe, China and others are making the leap to cleaner energy and as long as the sun doesn’t burn out we should be ok for several thousand more years!
Now, looking at the chart and technicals of Solar City we see a very favorable pattern. What’s interesting is during this recent corrective market action this stock has barely budged. I see this as a great sign of strength and support by institutional traders. The group has had good relative strength as well. Take a look at the chart below.
HIGH BETA NAME
Solar City is one of those high beta names that option traders love to play. This stock goes up and down like a yo-yo, highly volatile an especially susceptible to news. The company was started by Elon Musk (of Tesla fame) and is currently trading at near all time highs. What’s striking is the solid relative strength for a high beta name. We often find in a ‘risk off’ environment these names are the first ones to get hammered. I like the chart setup here and with earnings coming out shortly this could be a firecracker. The chart shows this most recent shallow pullback might be a great low-risk entry point.
EARNINGS ALERT
With earnings coming out in late February, with a strong market and technicals this could hit the 100 mark easy from here. My preferred play would be Mar 80 calls, of which I am currently in.
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Bob Lang has been managing private options trading accounts for clients since 2004 and providing subscribers with guidance on trading options for income at Explosive Options since 2011.
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