Plug Power (NASDAQ: PLUG) shares have been in a sustained decline, losing more than half their value from the year's peak. The stock is now trading near $2.09, approaching levels not seen since early 2023. However, options market activity suggests traders are positioning for a sharp reversal when the company reports second-quarter earnings on August 7.
Options market signals high volatility and bullish bias
Plug Power has historically experienced significant price swings around earnings announcements. The stock surged 13% after its April report and 30% following its March release. Implied volatility for options expiring on August 7 stands at 107%, placing it in the top quartile of historical readings.
According to Barchart data, total put volume reached 956 contracts, while call volume hit 973, yielding a put/call volume ratio of 0.98. More telling is the open interest picture: puts at 1,071 versus calls at 7,457, resulting in a put/call open interest ratio of just 0.14. That is a strongly bullish signal, indicating that investors are buying far more call options than puts in anticipation of upward movement.
Revenue growth and margin improvement expected
The bullish options positioning may be underpinned by analyst expectations for continued revenue expansion, driven by large supply agreements with Amazon and Walmart. The consensus estimate calls for second-quarter revenue of $170 million, with one analyst forecasting as high as $173 million.
Equally important, the projected loss per share is expected to narrow from $0.18 to $0.08, reflecting progress toward profitability. Plug Power has stated it aims to achieve net profitability within the next few years. For the full year, analysts project revenue of $813 million, up 15% year-over-year, with $962 million forecast for 2025. The company could cross the $1 billion annual revenue threshold as soon as next year.
In the most recent quarter, revenue rose 22% to $163 million, while gross margin improved to negative 13% from negative 55% in the same period last year.
Technical analysis points to oversold conditions
The daily chart shows PLUG stock in a persistent downtrend, falling from $4.32 in May to the current $2.09. The price is now approaching the extreme oversold level on the Murrey Math Lines tool. Meanwhile, the Relative Strength Index (RSI) is nearing the oversold threshold of 30, having declined from a peak of 73 earlier this year.
With short interest at 24% of the float, a rebound could be amplified by short covering. A move back toward the $2.35 resistance level is possible if earnings provide a catalyst. For context on how other hydrogen fuel cell stocks are faring, see our coverage of Bloom Energy's pre-earnings options activity.
Broader market factors, including the upcoming Federal Reserve decision and geopolitical tensions, could also influence risk appetite. Our analysis of three key drivers for the S&P 500 and Nasdaq this week provides additional context for investors.
This article is for informational purposes only and does not constitute financial advice.
