Bearish Betting Heats Up on First Solar, Inc. (FSLR)

One trader bought to open more than 2,200 First Solar, Inc. (FSLR) puts today

by Digital Content Group

Published on Jan 5, 2015 at 11:25 AM
Updated on Jun 24, 2020 at 10:16 AM

First Solar, Inc. (NASDAQ:FSLR) is reeling this morning, down 3.2% at $43.10, following a price-target cut to $62 from $87 at Baird -- which nevertheless underscored its "outperform" rating. This negative price action has brought out the option bears, as puts are crossing at quadruple the average intraday rate.

Digging deeper, one short-term bettor bought to open 2,206 weekly 2/6 41-strike puts, according to Trade-Alert. The ask price at the time of the sweep was $1.58, meaning the trader shelled out a total premium of nearly $350,000 (premium paid * number of contracts * 100 shares per contract) for his bearish wager. This represents his maximum risk, should FSLR stay atop $41 through the close on Friday, Feb. 6 -- when the weekly series expires. By contrast, the put buyer stands to profit on a move all the way down to zero in the underlying.

Today's preference for long puts over calls is par for the course, as far as First Solar, Inc. (NASDAQ:FSLR) is concerned. The security's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 1.18 -- just 6 percentage points from a 12-month high. This is understandable, given that the shares have sold off in recent months, after spending much of 2014 trying to break north of the $70 area.

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