Plug Power Inc. (NASDAQ: PLUG) shares rose another 10% on Friday after the company announced a new partnership with South Korean industrial company SK Group.
A flood of large Plug options had a mixed nature on Friday as investors decide what to make of the two-day stock boom.
The plug trade: On Friday morning, Benzinga Pro subscribers received dozens of alert warnings related to extraordinarily large deals on Plug options. Here are a handful of the biggest:
- At 9:36 a.m., a trader sold 1,000 Plug call options with a strike price of $ 36 that expired Friday near the bid price of $ 15.50. The trade was a clumsy bet of $ 1.55 million.
- Less than a minute later, a trader bought 1,184 Plug call options with a strike price of $ 36 that expired Friday near the asking price of $ 15,359. The trade represented a bullish bet of $ 1.81 million.
- At 10:23 a.m., a trader buys 1,152 Plug put options with a strike price of $ 49 that expires on February 19, close to the asking price of $ 5,295. The trade represented a clumsy bet of $ 609,984.
- At 10:40 a trader buys 486 Plug call options with a strike price of $ 30 expiring on March 19, close to the price of $ 24.50. The trade represented a bullish bet of $ 1.19 million.
Related Link: Tesla Option Traders Shut Down Large Bills
Why it’s important: Even stock-only traders regularly monitor the activities of the options market for unusually large trades. Given the relative complexity of the options market, large options traders are generally considered more sophisticated than the average stock trader.
Many of these great options traders are wealthy individuals or institutions that have unique information or theses related to the underlying stock.
Unfortunately, stock traders often use the options market to hedge against their larger stock positions, and there is no sure way to determine if an options trade is a stand-alone position or a hedge. Given the relatively large size of the largest Plug transactions, these can certainly be institutional hedges.
South Korea Optimism: Wednesday’s Plug Power deal involves SK Group taking a 10% stake in Plug for $ 1.5 billion, or about $ 29.29 per Plug share.
Plug shares soared Thursday and Friday as investors are optimistic that the new deal will put Plug’s foot in the door of South Korea’s “Hydrogen Economy Roadmap” plan. The initiative contains several goals, including 6 million hydrogen fuel cell cars on the road, the construction of 1,200 hydrogen fuels and the production of 5 million tons of hydrogen fuel by 2040 annually.
Plug is both a hydrogen producer and a fuel cell manufacturer, and South Korea could potentially be a massive new customer for the next 20 years.
The news also sparked a spate of bullish comments on Wall Street. Cowen & Co., B. Riley Securities and HC Wainwright have all raised their Plug price targets following the SK Group news. HC Wainwright said that by 2030, Plug could now generate $ 12.9 billion in annual revenue and $ 3.9 billion in annual operating profit.
Of course, the million-dollar question for clean energy investors who have big gains in a stock like Plug Power is whether it’s time to finally pull out of the red-hot stock. Plug has risen 1,299% in the past year and is currently trading at 67.1 times sales.
Benzinga’s name: Of the three Plug options that traded $ 1 million plus Friday morning, two were for contracts that expired Friday, suggesting little about where buyers and sellers will see the stock go in the medium or longer term.
The $ 1.19 million call purchase is perhaps best of all, as the contracts have a break-even price of $ 54.50, indicating that there will be another 3.2% lead for Plug over the next two months .
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