Options Trading News

December 6, 2012  Thu 9:34 AM CT

First Solar has been climbing, and one investor wants to protect those gains.

optionMONSTER's Depth Charge tracking program detected the purchase of 4,000 March 30 puts for $5 and the sale of an equal number of March 26 puts for $2.95. Volume was below open interest in the 26s but not the 30s, indicating that an existing position was rolled from one strike to the other.

The investor probably owns shares in the solar-energy stock and has been using the puts as a hedge. Adjusting the position cost $2.05, and raised by $4 the level at which they have protection against a pullback. (See our Education section)

FSLR is up 0.87 percent to $30.20 in morning trading and has roughly tripled since June. The stock has been rallying back after a selloff in the solar industry erased more than 90 percent of its value in the preceding 16 months.

The shares are now back near a level where they bounced in December 2011, which could be leading some chart watchers to expect resistance and help explain today's bearish option activity.

Puts account for more than three-quarters of the activity in the name so far today, according to the Depth Charge.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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