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First Solar, Inc. (FSLR) Rebound Has Call Players Piling On

A strong bounce for First Solar, Inc. has traders betting on additional gains

by 3/5/2014 11:16 AM
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Option Brief: First Solar, Inc. (NASDAQ:FSLR) has been on the mend since taking a post-earnings dip last Wednesday, thanks in part to a pair of end-of-week upgrades from RBC Capital and Baird. The stock is continuing to gain ground in today's session, up 0.7% at last check to linger near $58.14. In FSLR's options pits, call volume is running at a 78% mark-up to the average intraday pace, causing the equity's 30-day at-the-money implied volatility (IV) to rise 10.4% to 67.2%.

The most active strike by a mile is FSLR's April 59.50 call, where 3,507 contracts have changed hands. Nearly all of these positions have gone off on the ask side, IV is up 8.9 percentage points, and volume outstrips open interest, collectively inferring buy-to-open activity. It's a flip of the coin as to whether this call will be in the money at options expiration on Thursday, April 17, as delta is perched at 0.49. Should the equity fail to topple the strike price -- a feat not accomplished since early December -- the most the speculators stand to lose is the initial cash outlay.

As touched upon, First Solar, Inc. (NASDAQ:FSLR) took a 9% nosedive last Wednesday, following the solar power concern's dreary fourth-quarter earnings results and lackluster forecast. The equity did manage to find a foothold atop its 40-week moving average, and a solid bounce off this psychologically significant trendline has helped the shares rebound more than 17% from their Feb. 26 intraday low of $49.52.


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