Options Bears Target Solar Stock on Dismal Revenue, Outlook

Over the last three months, FSLR has shed nearly 35%

Digital Content Manager
Mar 2, 2022 at 10:01 AM
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First Solar, Inc. (NASDAQ:FSLRentered the earnings confessional after yesterday's close to report fourth-quarter earnings of $1.23 per share -- much better than the $1.06 per share analysts expected. However, the solar energy concern's revenue of $907.32 million missed the mark due to supply chain issues, leading the company to release a dismal 2022 revenue outlook. At last check, the security was down 15.6% to trade at $63.84. 

Analysts have been quick to blast First Solar stock with bear notes. The equity already received at least three price-target cuts, with one coming from J.P. Morgan Securities to $67 from $83. The brokerage bunch is skeptical towards FSLR, with 12 of the 15 firms in question carrying a tepid "hold" or worse rating.

The options pits lean firmly bullish, on the other hand. This is per the stock's 10-day call/put volume ratio of 3.61 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 89% of readings from the last year. This suggests that calls are getting picked up at a much quicker-than-usual clip. 

Echoing this, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.42 stands higher than just 1% of readings from the past 12 months. This means short-term options traders have rarely been more call-biased.

Today's options activity paints a different picture. So far, 12,000 puts and 3,390 calls have crossed the tape, which is 11 times the intraday average. Most popular is the 3/4 60-strike put, followed by the 55-strike put, with new positions being bought to open at both.

It's also worth noting FSLR's Schaeffer's Volatility Scorecard (SVS) sits at 85 out of 100. In other words, the stock has tended to exceed options traders’ annual volatility expectations.

Yesterday, the $77 level rejected the equity's bounce off its Feb. 24, roughly two-year low of $61.24. The 40-day moving average stifled this rally, too, and has been acting as a ceiling since late November. Over the last three months, FSLR has shed 35%.


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