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November 15, 2012  Thu 11:05 AM CT

TSL: SEE CHART GET CHAIN FIND STRATEGIES
Shares of Trina Solar have fallen to another all-time low, and put trading tops the action in the name.

More than 4,800 TSL options trade, compared to a daily average of 735 over the last month, and almost all of today's activity is in one trade. optionMONSTER's systems show that a trader sold 1,500 March 3 puts for $0.77 against open interest of 2,48 and bought 3,000 March  2 puts for the ask price of $0.30, with no open interest at that strike.

The trade could be a ratio spread aimed at profiting if TSL is above $3 or continues to collapse. It could also well be a roll lower, with the trader selling in-the-money puts and buying twice as many at the lower strike while taking some money off the table in the process. (See our Education section)

TSL is down 6.46 percent to $2.46, just above the session low of $2.42. The manufacturer of solar products has fallen sharply in the last week from above $4. Shares were above $7 in late June at above $10 in February.
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Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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