Stocks quoted in this article:
Option Brief: Shares of First Solar, Inc. (NASDAQ:FSLR) are extending yesterday's gains -- up 8% this afternoon to trade at $49.67 -- after the firm announced earlier this week plans to build a 250-megawatt solar power plant on the west coast. As a result, option bulls are swarming the stock today, with roughly 52,000 calls exchanged so far. This is almost four times the intraday norm, and about triple the number of puts traded. Not surprisingly, the security's 30-day, at-the-money implied volatility (IV) is up 3.7 percentage points, or 5.2%, to 73.4%.
Garnering notable attention is the weekly 11/22 50 strike, which has seen around 3,100 calls cross the tape -- including a block of 2,000 contracts that went off at the ask price of $3.30 each, suggesting they were purchased. Meanwhile, today's volume has easily surpassed present open interest levels, and IV at this strike has climbed 5.1 percentage points -- signaling buy-to-open activity.
In this scenario, the trader is counting on FSLR to muscle north of breakeven at $53.30 (strike price plus the premium paid) by the close on Nov. 22, when these weekly options expire. This would entail a rise of 7.3% from the security's current price. At last check, the delta for this call stood at 0.53, implying it has a more than 1-in-2 chance of finishing in the money. Still, even if the shares remain south of the strike price over the next few weeks, the most the buyer stands to lose is the initial cash outlay.
FSLR has been a standout on the charts, boasting a gain of 61% year-to-date, and around 98% year-over-year. Nevertheless, short interest accounts for a lofty 15.3% of the equity's available float -- suggesting that some of the aforementioned out-of-the-money call volume could be attributed to skeptics looking to hedge their bearish bets.
It should also be noted that First Solar, Inc. (NASDAQ:FSLR) is tentatively scheduled to report quarterly earnings between Oct. 28 and Nov. 7. For the third quarter, analysts are expecting a profit of 95 cents per share.
For additional information on First Solar, Inc. (NASDAQ:FSLR) -- such as charts and sentiment data -- please visit our FSLR quote page.