What's Happening In Ocean Power Shares?

Ocean Power Technologies Inc (NASDAQ: OPTT) stock has caught fire this week after the company was granted a patent for a wave energy converter buoy on Tuesday.

Ocean Power is an alternative energy company that specializes in harnessing the power of ocean waves via floating storage systems. The company has previously landed development contracts with Mitsui Engineering and Shipbuilding and the U.S. department of defense.

Ocean Power’s buoys float on the surface of the ocean, and passing waves push a cylinder up and down to generate electricity. This type of wave power is still in its very early stages of development, but improvements to the technology could make it a major source of renewable energy in the future.

Traders see the new patent as a sign the next chapter of the Ocean Power story may soon begin.

The Rally...

The stock rallied from around $1.27 to above $1.50 on Tuesday before selling off to finish the day at $1.44. The stock made a huge move on Wednesday on its largest volume in more than a year, pushing as high as $2.54 before drifting lower to around $2.20 in mid-day trading.

It’s likely that at least some of Wednesday’s buying is short sellers exiting their positions. According to Shortsqueeze.com, Ocean Power has an elevated 23.2 short percent of float. There are more than 1.3 million shares held short with 8.2 days to cover.

For now, traders will be watching to see how Ocean Power closes out Wednesday’s session to determine whether the stock is in the beginning stages of a huge rally or has already peaked at $2.54 and is headed back below $2.00.

Ocean Power stock traded as high as $15.65 in 2016 and as low as $1.14 roughly a month ago.

Related Link: Tariffs Or No Tariffs, SunPower's Outlook Is Dim