Plug Power Inc (NASDAQ: PLUG) shares jumped another 10% on Friday after the company announced a new partnership with South Korean industrial company SK Group.
A flurry of major Plug options trades was mixed on Friday as investors decide what to do with the two-day stock rise.
The Plug Trades: On Friday morning, Benzinga Pro subscribers received dozens of option alerts related to the Plug’s unusually large options trading. Here are some of the biggest:
- At 9:36 am, a trader sold 1,000 Plug call options with a strike price of $ 36 expiring on Friday close to the offer price of $ 15.50. The deal represented a $ 1.55 million low bet.
- Less than a minute later, a trader bought 1,184 Plug call options with an exercise price of $ 36 expiring on Friday close to the sale price of $ 15,359. The deal represented a bullish bet of $ 1.81 million.
- At 10:23 am, a trader bought 1,152 put options with a strike price of $ 49 expiring on February 19, close to the sale price of $ 5,295. The deal represented a low bet of $ 609,984.
- At 10:40 am, a trader bought 486 Plug call options with an exercise price of $ 30 expiring on March 19, close to the sale price of $ 24.50. The deal represented a bullish bet of $ 1.19 million.
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Because it’s important: Even traders who limit themselves exclusively to stocks often monitor the activity of the options market closely for exceptionally large trades. Given the relative complexity of the options market, large options traders are usually considered more sophisticated than the average stock trader.
Many of these big options traders are wealthy individuals or institutions that may have unique information or theses related to the underlying stocks.
Unfortunately, stock brokers often use the options market to hedge against their larger stock positions, and there is no foolproof way to determine whether an options trade is an autonomous position or a hedge. In that case, given the relatively large size of Plug’s biggest trades, they could certainly be institutional hedges.
South Korea’s optimism: The Plug Power deal on Wednesday involves SK Group taking a 10% stake in Plug for $ 1.5 billion, or about $ 29.29 per share of Plug.
Plug’s shares skyrocketed on Thursday and Friday because investors are optimistic that the new deal will put Plug’s foot in the door of South Korea’s “Hydrogen Economy Map” plan. The initiative includes several aspirational goals, including putting 6 million hydrogen fuel cell cars on the roads, building 1,200 hydrogen fueling stations and producing 5 million tons of hydrogen fuel annually by 2040.
Plug is both a hydrogen producer and a fuel cell producer, and South Korea could be a major customer in the next 20 years.
The news also sparked a wave of optimistic comments from analysts on Wall Street. Cowen & Co., B. Riley Securities and HC Wainwright increased their Plug price targets after news from SK Group. HC Wainwright said Plug can now generate $ 12.9 billion in annual revenue and $ 3.9 billion in annual operating profit by 2030.
Obviously, the million-dollar question for clean energy investors with massive gains in shares like Plug Power is whether or not now is the time to finally cash out red-hot shares. Plug’s shares grew 1.290% last year and are currently trading at 67.1 times sales.
Benzinga’s opinion: Of the three plug options trades of more than $ 1 million on Friday morning, two were for contracts that expire on Friday, suggesting little about where buyers and sellers view the stock in the medium or long term.
The purchase of the $ 1.19 million call may be the most revealing of all, as the contracts have an equilibrium price of $ 54.50, suggesting another 3.2% increase for Plug in the next two months.
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