BREAKING: Traders Are Loading Up on Put Options for Recent "Short Squeeze Hero"

SunPower, the solar stock that had its Cinderella moment with a 105% surge during the meme stock madness and a classic short squeeze on May 14th, is back in the spotlight. 

But this time, it’s not about proving the haters wrong despite that juicy 96% short interest. 

Nope, the spotlight's now on traders snapping up put options like they're stocking up for the apocalypse, betting SunPower's about to faceplant.

The latest data shows that investors bought 25,863 put options—28% more than the usual 20,224. So, why's everyone suddenly so bearish on this solar hopeful?

This week, SunPower's stock has dropped over 60% and over the past year, it's shed nearly 90% of its value. The company just announced it’s hitting the brakes on new leases, installations, and shipments, leaving dealers out in the cold. Guggenheim analysts are waving the white flag, suggesting SunPower might be nearing the end of its sunny days.

A letter from July 17, obtained by Roth MKM, showed SunPower scrambling to find anyone willing to take over their sold projects, reminds me of The Office episode where Michael Scott can’t get anyone to work for Dunder Mifflin at the job fair.

SunPower’s stock limped to a dismal $1.51 close on Thursday, but that was just the beginning of its descent. Guggenheim slashed its price target to zero, essentially saying the stock is now as valuable as a soggy cardboard box. 

At the time of this writing, the stock has plummeted all the way down to $.94. Analysts Joseph Osha and Hilary Cauley didn’t sugarcoat the situation, declaring SunPower's equity about as useful as a used lottery ticket. Looks like whoever bought put options is having a good start to their weekend.

JPMorgan called SunPower’s situation an "indefinite suspension" of operations, mainly due to its shaky cash flow and inability to access capital markets. Piper Sandler has given up and suspended its coverage of the stock. 

The residential solar sector is getting pummeled by high interest rates and persistent inflation, leaving companies with too much inventory and not enough buyers. Hopes for relief this year have dimmed as the Federal Reserve keeps interest rates higher than expected. 

Add in the political uncertainty with the upcoming presidential election, and it’s like trying to sell solar roofs in England on a rainy day. The sector has been enjoying tax credits under the Inflation Reduction Act, but a potential Republican sweep could rain on that parade.

Stock.News does not have positions in companies mentioned.