Pullback Prompts Put Buying on Evergreen Solar, Inc.

Put activity is much heavier than usual today on Evergreen Solar, Inc. (ESLR), with more than 4,100 of these bearishly skewed contracts crossing the tape so far. By contrast, the low-priced equity was expected to see put volume of just 173 contracts today.

The bulk of the activity is centered around ESLR's April 1 strike, where 4,000 contracts have traded so far. Nearly all of the major block trades at this strike have occurred at the ask price, suggesting that most of these contracts have been purchased. Since there's currently just one lone put contract in open interest at the April 1 strike, traders appear to be adding new positions here today.

With ESLR hovering near $1.23 this afternoon, April 1 put buyers are speculating on a near-term decline. However, this bearishly biased option activity is nothing new for the stock. ESLR's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.43, in the 77th annual percentile -- revealing that short-term option players have been more pessimistically aligned just 23% of the time during the past year.

Short sellers are also piling on, with the number of ESLR shares sold short escalating by 10.7% during the past month. Now, short interest represents a lofty 12% of the stock's available float, or 8.5 times ESLR's average daily trading volume.

Today's uptick in put buying occurs as ESLR faces a critical juncture on the charts. The shares recently broke out above stubborn pressure from their 10-day and 20-day moving averages, but upward progress was halted by the $1.30 level. Now, the stock is struggling to maintain its hard-won foothold atop these short-term trendlines.

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