First Solar, Inc. (FSLR) Calls Hot After M&A Pop

First Solar, Inc. (FSLR) weekly calls are dominating the options pits

Mar 9, 2015 at 12:01 PM
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The shares of First Solar, Inc. (NASDAQ:FSLR) shot to $61.99 around 10 a.m. ET, amid reports of unsubstantiated chatter that the company could be taken private, but have since trimmed their lead to 0.1% to sit at $60.69. (Merger Mania is also sweeping other parts of Wall Street.) Meanwhile, FSLR calls are flying off the shelves at twice the average intraday clip, as speculators gamble on a short-term bounce for the alternative energy issue.

5-Minute Chart of FSLR since March 6

Calls have outnumbered puts by a margin of more than 11-to-1 thus far, and the stock's 30-day at-the-money implied volatility popped 4.5% to 42.2%, highlighting the rush to near-term options. In fact, weekly calls expiring at Friday's close account for the five most active options.

Digging deeper, it looks like bulls are buying to open the weekly 3/13 60.50- and 61.50-strike calls, which will be in the money if FSLR finishes the week atop the respective strikes. This preference for short-term calls marks a change of pace for FSLR, though, as the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.96 sits just 4 percentage points from an annual high. In other words, near-term traders have rarely been more put-heavy.

Technically speaking, First Solar, Inc. (NASDAQ:FSLR) has added roughly 36% in 2015, largely thanks to a post-earnings bull gap in late February. As such, the equity's 14-day Relative Strength Index (RSI) sits at 76 -- in overbought territory.

 

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