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Option Brief: First Solar, Inc. (NASDAQ:FSLR) calls are trading at nearly double the average intraday pace this afternoon. In fact, all of the 10 most active strikes are calls, most of which are short term. However, not all of these bets are of the typical bullish variety.
The top position belongs to the solar concern's weekly 2/28 53-strike call, where nearly 2,200 contracts are on the tape -- easily outstripping open interest, meaning new positions have been created. However, three-quarters of the volume has traded at the bid price, suggesting the calls were sold to open, as short-term speculators bet against a move higher.
Specifically, today's FSLR call writers want the shares to stay below $53 and expire worthless on Friday, Feb. 28, so that they can pocket 100% of the initial premium received. Conversely, if the stock charges north of that mark, the traders may be assigned -- in which case, they could be on the hook to deliver the shares for $53 apiece, no matter how much they're worth. Currently, the option's delta sits at 0.51, denoting a roughly 1-in-2 chance of an in-the-money finish. Given FSLR's year-over-year gain of roughly 60%, however -- compared to its slight year-to-date deficit -- today's traders could also be shareholders employing a covered call strategy to generate additional income in the short term.
On the charts, First Solar, Inc. (NASDAQ:FSLR) has struggled to tackle the 53 strike this year. In fact, the equity hasn't surmounted that level since mid-January -- though it got close today, hitting an intraday high of $52.94. At last check, FSLR shares were 2.1% higher at $52.68.