First Solar, Inc. (FSLR) Options Heat Up Amid Analyst-Induced Headwinds

First Solar, Inc. (FSLR) is down more than 5% on a bearish note from Goldman Sachs

by Alex Eppstein

Published on Oct 7, 2016 at 2:23 PM

First Solar, Inc. (NASDAQ:FSLR) is getting wrecked this afternoon, following a downgrade to "neutral" from "buy" at Goldman Sachs -- which also slashed its price target by $16 to $42. Also weighing on the solar stock is news that the company's joint venture with SunPower Corporation (NASDAQ:SPWR) has drawn red flags from regulators. Amid the technical and fundamental drama, FSLR options are trading at a slightly accelerated pace.

Starting with the charts, the stock was last seen 5.2% lower at $37.69. This drags FSLR's year-to-date loss to 43%, and its descending 50-day moving average still looms as potential resistance after blocking a recent rally attempt. On a relative-strength basis, the shares have had a rough go of it lately, underperforming the broader S&P 500 Index (SPX) by 16 percentage points in the last three months.

Turning to the options pits, intraday volume is at 1.2 times the expected rate. Among the most active options is the weekly 10/14 39-strike put, where it appears some buy-to-open activity is transpiring at a volume-weighted average price (VWAP) of $1.92. In short, the goal for these put buyers is for FSLR to tumble south of $37.08 (strike less VWAP) by next Friday's close, when the weekly series expires.

These aren't the only options traders betting bearishly on First Solar. In fact, the put seeing the largest increase in open interest over the past two weeks is the October 38 strike, and data from the major exchanges confirms a considerable portion were freshly purchased.

Likewise, short sellers have been piling on, with the selling pressure likely contributing to the stock's recent multi-year low. Over 18% of First Solar, Inc.'s (NASDAQ:FSLR) float is sold short, and just two reporting periods ago, short interest hit levels not explored since June 2013.

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