The solar company's shares were up 9.3 percent to$18.19 on the New York Stock Exchange.

SunEdison's options were also active with 27,000 calls and about 10,000 puts traded by 1:40 p.m., according to options analytics firm Trade Alert.

The trading activity followed a report that Einhorn, the firm's largest outside investor, was recommending the stock at the Robin Hood Investors Conference in New York on Monday, WhatsTrading.com options strategist Fred Ruffy said.

According to Business Insider, which cited an anonymous source, Einhorn told the audience that SunEdison shares are mispriced.

The Robin Hood event is a closed-to-press gathering sponsored by the hedge fund industry's anti-poverty charity, and managers are expected to keep their ideas secret until they take the stage because attendees pay thousands of dollars to hear their new ideas first.

Einhorn, a billionaire and founder of hedge fund Greenlight Capital, which owned 7.92 percent of SunEdison as of June 30, was one of the first speakers at the conference, according to the event's website. Greenlight Capital did not immediately respond to a request for comment.

Einhorn added to his SunEdison holdings at an aggressive pace earlier this year. At the end of 2013, Greenlight reported owning just 1.31 million shares, and bought an additional 20 million shares through the first and second quarters, regulatory filings show.

Calls betting on SunEdison shares touching $18 by Friday and others banking on the shares rising to $20 by Nov. 22, were among the busiest options on the stock.

The median price target on the stock among brokerage analysts is $26, according to Thomson Reuters StarMine.

(Reporting by Saqib Iqbal Ahmed; Editing by Nick Zieminski)