Inside This $1.5 Million Bet on First Solar, Inc. (FSLR)

First Solar, Inc. (FSLR) put selling has been popular of late

by Digital Content Group

Published on Apr 17, 2015 at 2:44 PM
Updated on Jun 24, 2020 at 10:16 AM

First Solar, Inc. (NASDAQ:FSLR) puts are flying off the shelves today at quadruple projected intraday levels. The majority of the puts exchanged are the result of 7,350-contract block at the May 60 strike, which was sold to open according to Trade-Alert.

By writing the FSLR puts to open, the seller collected a total net credit of over $1.5 million -- $2.08 premium * 7,350 contracts * 100 shares per contract. This represents the trader's maximum potential profit, provided the shares remain above the strike through the close on Friday, May 15, when the soon-to-be front-month options expire. However, the seller faces considerable downside risk if FSLR breaches $60 during the option's lifetime.

Put selling has actually been quite popular in recent months at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). During the past 50 sessions, specifically, nearly 7,500 puts have been sold to open, versus fewer than 4,300 bought to open.

This confidence isn't shared by everyone. Over half of the analysts tracking FSLR rate it a tepid "hold," and the equity's consensus 12-month price target of $64.62 is just a chip-shot away from current trading levels. In other words, the stock could be primed to benefit from some positive brokerage attention.

This is long overdue, given First Solar, Inc.'s (NASDAQ:FSLR) technical tenacity. While the shares are off 2.3% this afternoon at $61.47 amid a broad-market sell-off, they remain nearly 39% higher on a year-to-date basis, and have outperformed the broader S&P 500 Index (SPX) by 46.7 percentage points over the last three months.


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