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Option Brief: To the delight of last Wednesday's option players, First Solar, Inc. (NASDAQ:FSLR) is on pace to notch its first daily close north of $50 this month, with the stock 2.5% higher at last check to linger near $51.08. Not surprisingly, call volume is trading at a 64% mark-up to typical intraday levels, and against this increased demand, the equity's 30-day, at-the-money implied volatility (IV) has jumped 5.5% to 75.5%. However, one group of speculators is looking above and beyond the round-number $50 mark, and eyeing a move to levels not seen since September 2011.
Specifically, the June 70 call is the most active strike in FSLR's options pits today, and the majority of the 3,279 contracts traded here have done so on the ask side. IV is up 2.6 percentage points, and volume is easily outstripping open interest, making it safe to assume that a fresh batch of bullish bets has been initiated. Given the length of time that FSLR has spent below the strike price, delta for the call is docked at 0.25, or 25%, suggesting a 1-in-4 chance of an in-the-money finish at expiration.
On the charts, First Solar, Inc. (NASDAQ:FSLR) has been on the decline since hitting a two-year high of $65.99 in mid-November, with the shares off about 22.6%. The stock has been making an attempt at technical redemption in recent sessions, and has tacked on 7% since last Thursday. Considering short interest accounts for 16.5% of the equity's available float, a portion of the today's activity at the deep out-of-the-money June 70 call could be a result of short sellers hedging against any additional upside.