Another Shot at Suntech Power Earnings Play on 20th Nov

Shares of Suntech Power (NYSE:STP) dropped almost 10% on 16th Novemeber – 2 days before options expiration. It fell from $28.50 to $26 on no news. Read somewhere it may be due to something known as pinning or whatever that is related to options expiring. Not too sure about the mechanics but I seen it happened many times before so I am sort of a believer now.

Looking to buy some STP DEC 25 call options to play the earnings on 20 Nov. Have to buy the DEC options because the NOV options expires today!

I have always been a great fan of this stock. I reiterate that Suntech Power is the best solar stock in the market.

The following reasons sums up why I think STP is a great long term play.

1. Leader in Solar and Solar is the way to go for alternative energy.

2. Low cost manufacturing in China.

3. Locked in long term supply for polysilicon – a key raw material – with major suppliers like MEMC.

4. Finally and most importantly, demonstrated consistent quarter over quarter revenue and earnings growth.

So I bought some DEC 25 calls on Friday for $3.10 a piece when shares were trading for $27 each. Gotten pricey due to a last minute upgrade by Thomas Wiesel. Shares were up to $27.88 in the afterhours trading – almost to where it was 2 days ago.

Update: Sunpower (SPWR) just acquired Powerlight – a major solar systems provider in America. Perhaps this is the reason for STP’s recent decline. On the other hand, SPWR getting stronger and more promising now. Maybe good to buy some when they hit the low 30s.


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