What’s Up with MEMC Electronic Materials Call Options?

MEMC Electronic Materials (WFR) stock options went haywire yesterday and its stock price was up about 2%.

MEMC is based in St. Peters Missouri and is in the business of silicon wafers. It’s wafers are used for all sorts of semiconductor devices, microprocessors, memory and solar cells.

MEMC’s competitors include Shin-Etsu Handotai (private), Siltronic (private), and SUMCO.

MEMC recently announced they plan to acquire SunEdison, a provider of integrated solar systems. If you want to go green with solar, then SunEdison is a company that can help you.

MEMC’s acquisition of SunEdison appears to be a good move, allowing MEMC to own and control more of the supply chain to its customers.

MEMC’s stock price hasn’t been doing very well over the last year and is well off of its two-year price in the $95 range.

The call option action for MEMC yesterday was significant in the short-term November call options with a significant amount of action in the out-of-the-money November 13 call option.

MEMC’s call option action is looking bullish, but its stock price hasn’t been behaving very nicely. A good play for MEMC might be a collar, a covered call investing position with some put option protection. A December collar is available with a potential return of 3.3% with a maximum risk of 9.8%. The call option of interest to sell would be the December 13 with ticker symbol CJCLN and the put option of interest to purchase would be the December 11 with ticker symbol CJCXG.

To enter the collar position an investor would purchase the stocks in multiples of 100 shares for their trading portfolio and sell one call option an purchase one put option for each 100 shares of stock purchased for their personal stock portfolio.

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[tags] silicon wafers, semiconductor, microprocessors, memory, solar cells, Shin-Etsu Handotai, Siltronic, SUMCO, SunEdison, solar systems, solar, out-of-the-money, WFR, MEMC Electronic Materials Inc. [/tags]