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Prediction markets are pricing in a landslide Democratic victory in Tuesday’s midterm elections, with traders leaning toward a group of stocks that investors classify as benefiting from left-wing leadership.
Options trading in clean energy stocks, particularly solar power companies, soared on Tuesday even as most companies in the industry group fell year-over-year due to the group’s fifth consecutive month of declines.
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volume of Invesco Solar ETF (TAN) Tuesday’s spike was 40 times normal, according to Cboe LiveVol data. The fund, which typically trades fewer than 500 trades a day, had more than 20,000 trades by midday last month, 99% of which were calls. The ETF has rebounded more than 400% from its pandemic lows to the 2020 election, regaining almost all of its gains by April of last year.
Invesco Solar ETF (TAN) year-to-date
According to SpotGamma data, the most popular trade on TAN was buying a 50-strike call expiring in December at 80 cents for a 17% upside. 46-strike and 47-strike calls were also popular as the deadline approached.
Among individual stocks, solar edge technologies It stands out with a trading volume that is 3 times the average and a pace of over 75% of call trades. The company will report earnings before the bell tomorrow, and shares rose more than 6% on Tuesday. The most popular trade was buying a 35-strike call that expires on Friday.
“If there’s blue in the White House, that’s why I want solar power,” said Charlie Moon of Chicago-based Prosper Trading Academy. “However, Enphase has noticeable insider buying.”
The bull was definitely dabbling enphase energy‘s stock fell 20% after last week’s earnings, but has since fully recovered and was up 9% on Tuesday. At twice the average volume, traders likely bought 8,600 calls compared to fewer than 900 puts.
The most popular trade on Enphase is buying 35-strike calls expiring in January, which costs $2.45 per contract and requires Enphase to rise 23%.
