During the past 10 days, traders on the International Securities Exchange (ISE) have bought to open 2.55 calls for every put. This ratio ranks higher than 81.3% of other such readings taken during the past year, revealing that SPWRA's call options have been more popular less than 19% of the time.

In recent weeks, speculative investors have set their sights on SPWRA's May 25 call. Open interest at this narrowly out-of-the-money strike has swelled by roughly 2,000 contracts during the past two weeks, and now stands at 2,608 contracts. This makes the May 25 strike the site of peak call open interest in the newly front-month series. Also in play is the May 30 call, with open interest of 2,275 contracts.

The trend toward call buying ahead of earnings suggests that some traders have high hopes for SPWRA's quarterly report. It's hard to believe bullish sentiment is truly rising, though, considering the stock's poor price action. The shares have shed 70.4% during the previous 52 weeks, and they're trading below staunch resistance from their 10-week and 20-week moving averages.

Taking a closer look at the stock's sentiment backdrop, it's possible that anxious short sellers are hedging their bets ahead of earnings. The number of SPWRA shares sold short rose by 31.7% during the past month, and now accounts for a hefty 13.2% of the equity's float.

Since buy-to-open call volume is rising in step with short interest ahead of earnings, it seems very likely that bearish bettors are hedging against the possibility of an upside surprise by purchasing out-of-the-money calls. This strategy allows traders to maintain their short exposure, while limiting potential losses in the possibility of a post-report rally.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.