Options traders are placing substantial bets on clean energy stocks, particularly solar companies, ahead of Tuesday's midterm election results, with prediction markets pricing in a significant Democratic victory [1]. The Invesco Solar ETF (TAN) experienced extraordinary options activity, with volume surging to 40 times higher than usual on Tuesday, trading more than 20,000 contracts by midday compared to its typical fewer than 500 contracts per day over the past month, with 99% of the volume concentrated in call options [1]. The most popular trade in TAN was buying the 50-strike call for December expiry at 80 cents, positioning for a 17% rally, while nearer-term 46 and 47-strike calls also attracted significant interest [1].
Among individual stocks, SolarEdge Technologies (SEDG) and Enphase Energy (ENPH) drew particular trader attention [1]. SolarEdge was on pace for three times higher-than-average volume with more than 75% of trading in calls, rallying more than 6% on Tuesday ahead of its earnings report, with the most popular trade being the purchase of 35-strike calls expiring Friday [1]. Enphase Energy also saw elevated activity on twice-average volume, with traders buying 8,600 calls compared to under 900 puts; the stock had fallen 20% following earnings last week but fully recovered, rallying 9% on Tuesday [1]. The most popular Enphase trade was buying the 35-strike call expiring in January at $2.45 per contract, requiring a 23% rally to reach profitability [1].
Trader sentiment reflects confidence in Democratic electoral success as a catalyst for clean energy stocks. Charlie Moon of Chicago-based Prosper Trading Academy stated, "I would only like solar if blue was in the White House," highlighting the perceived policy tailwinds from Democratic leadership [1]. Additionally, insider buying activity at Enphase Energy has attracted bullish traders following the company's recent earnings decline and subsequent recovery [1]. The TAN ETF had previously rallied more than 400% from its pandemic low through the 2020 election before surrendering almost all gains by April of the following year, suggesting traders are betting on a repeat of that election-driven rally [1].
CONCLUSION
Options traders are aggressively positioning for a clean energy rally contingent on Democratic midterm election success, with solar stocks TAN, SEDG, and ENPH seeing unprecedented call option volume. The positioning reflects both policy expectations and technical recovery patterns, though the sector's history of post-election volatility suggests significant execution risk for these bullish bets.