Sunpower Surges 38.65%: Were Option Traders Lucky, Good, or Cheating?

After the close it was announced that Total SA (TOT) has offered to buy 60% of Sunpower (SPWRA) for $1.38B, a $23.25 Tender Offer Price, and shares jumped 38.65% in one of the largest Solar deal to date, an industry that has yet to see much M&A.

I had recently posted a bullish "Options Radar" to clients, and here is what I posted on April 15th, just two weeks ago:

OPTIONS RADAR: High Delta Bullish Trades Surface in Sun Power


Ticker/Price: SPWRA ($15.80)

Analysis:

"Sun Power (SPWRA) is trading 6,700 calls, in line with daily average, but interesting action with the deep ITM June $13 calls trading 4,640 vs OI of 632, opening bullish buyers at $3.10. Shares have come down after a big earnings run and found support near $15.50 where the 100 day EMA is bullishly crossing the 200 day EMA. The $1.6B Solar Co. is turning into a major value name with a 15% short float, trading just 6.6X earnings, 0.37 PEG, 0.96X book and 2.49X cash value. US and German solar demand seems to be waning, so the Chinese solar stocks are favored currently, but traders are liking Sun Power on this pullback. Sun Power is working on a 250MW California Valley Solar Ranch, and is set to benefit from a Government push to solar components for power plants, recently receiving DoE backing."

As I noted, shares were a great value, and obviously Total SA (TOT) saw the same thing. The June $13 calls are likely to be worth at least $10 tomorrow on the open, a triple from when the near $1.5M worth of calls was bought less than 2 weeks ago.

Sunpower would have never been on my radar if the options action had not shown up in my scans, and this is why I think it is a must to follow options flow, as it often leads you to stocks that are going to move big, and in this case it happened rather quickly.

Sunpower has a great chart heading into this news with a strong volume bounce off support today, and this deal is sure to get Solar stocks heated again.