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One trader bought to open more than 2,200 First Solar, Inc. (FSLR) puts today
First Solar, Inc. (NASDAQ:FSLR) is reeling this morning, down 3.2% at $43.10, following a price-target cut to $62 from $87 at Baird -- which nevertheless underscored its "outperform" rating. This negative price action has brought out the option bears, as puts are crossing at quadruple the average intraday rate.
Digging deeper, one short-term bettor bought to open 2,206 weekly 2/6 41-strike puts, according to Trade-Alert. The ask price at the time of the sweep was $1.58, meaning the trader shelled out a total premium of nearly $350,000 (premium paid * number of contracts * 100 shares per contract) for his bearish wager. This represents his maximum risk, should FSLR stay atop $41 through the close on Friday, Feb. 6 -- when the weekly series expires. By contrast, the put buyer stands to profit on a move all the way down to zero in the underlying.
Today's preference for long puts over calls is par for the course, as far as First Solar, Inc. (NASDAQ:FSLR) is concerned. The security's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 1.18 -- just 6 percentage points from a 12-month high. This is understandable, given that the shares have sold off in recent months, after spending much of 2014 trying to break north of the $70 area.