Buffett deal propels First Solar calls
David Russell | email@example.com
MidAmerican Energy, part of the billionaire's sprawling Berkshire Hathaway, agreed to pay $2 billion to $2.5 billion for two solar-generating stations in southern California. That's triggering a rally in solar-energy stocks, making it the best performer of any group tracked by our researchLAB tool.
But the fast money is really in another name, First Solar. Yesterday its 34.50 calls expiring this Friday traded for $0.05 and ended the session valued for just $0.01. Then when Buffett's news hit, FSLR shot higher by 10 percent to $35.25--but that was nothing compared with the calls, which gained more than 8,000 percent. (See chart below)
Ironically, the news wasn't even related to FSLR directly, but rival SunPower. MidAmerican's investment in the solar space is being interpreted as a vote of confidence in the solar-energy industry. SPWR doesn't normally trade a lot of options and doesn't have weekly contracts, so fast-money traders looked to FSLR.
Solars had been climbing even before Buffett made his move, and entered the session as the strongest group on researchLAB over the preceding month.
Total option volume in FSLR is twice the daily average so far today, with short-term weekly contracts dominating the activity.