First Solar, Inc. (FSLR) Burst Brings Out Bulls

First Solar, Inc. (FSLR) is in rally mode today, following upbeat news out of China

by Karee Venema

Published on Feb 2, 2015 at 1:25 PM
Updated on Apr 20, 2015 at 5:32 PM

Similar to fellow alternative energy names Canadian Solar Inc. (NASDAQ:CSIQ) and Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE), First Solar, Inc. (NASDAQ:FSLR) is trading higher today on news China is planning to increase its use of renewable energy. This positive price action has sent call players flocking to FSLR's options pits, where the contracts are crossing the tape at a rate two times the intraday average.

Drilling down, short-term traders appear to be buying to open the weekly 2/6 45-strike call, as they eye a bigger bounce through week's end -- when the contracts expire. Elsewhere, it looks as if longer-term traders are purchasing new positions at the deep out-of-the-money April 67.50 call, as they roll the dice on a move north of $67.50 by April options expiration -- a level FSLR hasn't conquered on daily closing basis since late September.

Widening the sentiment scope reveals today's accelerated call activity runs counter to the withstanding trend. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, FSLR's 10-day put/call volume ratio of 1.12 ranks in the 92nd annual percentile. In other words, puts have been bought to open over calls with more rapidity just 8% of the time within the past year.

This skepticism more closely aligns with FSLR's longer-term technical trajectory, with the shares off more than 39% since hitting their most recent high of $73.78 on Sept. 12. However, thanks to today's 5.8% pop that has the equity lingering near $44.77, First Solar, Inc. (NASDAQ:FSLR) is on pace to close north of its 50-day moving average for the first time since Sept. 24.

Daily Chart of FSLR Since September 2014 With 50-Day Moving Average

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