IB Options Brief: First Solar, Inc. (FSLR)

Posted February 27th, 2012 by Caitlin Duffy in Unusual Activity

FSLR ñ First Solar, Inc.
Big prints in First Solar put options appear to be the work of an investor taking profits on one sizable put spread and simultaneously initiating a fresh bearish stance on the stock. Shares in FSLR trade 0.35% lower on the day at $35.46 as of 12:30 p.m. in New York, a near 80.0% discount to the stockís April 1, 2011, 52-week high of $163.00, and a staggering 89.0% discount to the May 2008 all-time high of $317.00.

The investor responsible for the largest options trades on FSLR today appears to be banking gains on one bearish stance initiated back on Valentineís Day, while positioning anew for the shares to worsen in the near term. It looks like the trader pocketed net profits of $0.70 per contract on the 11,625-lot Mar. $32/$39 put spread he or she originally purchased at a net premium of $2.88 apiece. Shares in FSLR have declined roughly 8.0% since the put spread was initiated, allowing the investor to sell the spread today at a net premium of $3.58 per contract.

Next, it appears the strategist established a fresh bearish stance on First Solar, buying the 12,533-lot Mar. $27/$34 put spread at a net premium of $1.80 per contract. Profits are available on the position in the event that FSLRís shares decline another 9.2% to breach the effective breakeven price of $32.20 by expiration. The put player may walk away with maximum possible profits of $5.20 per contract at March expiration should the price of the underlying plunge 23.9% to settle below $27.00. Of course, the trader may choose to take profits on the new bearish spread in advance of expiration should the spread widen out in the next few weeks.

--------------------------------------------------------------------------

Note: The material presented in this commentary is provided forinformational purposes only and is based upon information that isconsidered to be reliable. However, neither Interactive Brokers LLC norits affiliates warrant its completeness, accuracy or adequacy and itshould not be relied upon as such. Neither IB nor its affiliates areresponsible for any errors or omissions or for results obtained from theuse of this information. Past performance is not necessarily indicativeof future results.

This material is not intended as an offer or solicitation for thepurchase or sale of any security or other financial instrument.Securities or other financial instruments mentioned in this material arenot suitable for all investors. Any opinions expressed herein are givenin good faith, are subject to change without notice, and are onlycorrect as of the stated date of their issue. The information containedherein does not constitute advice on the tax consequences of making anyparticular investment decision. This material does not take into accountyour particular investment objectives, financial situations or needsand is not intended as a recommendation to you of any particularsecurities, financial instruments or strategies. Before investing, youshould consider whether it is suitable for your particular circumstancesand, as necessary, seek professional advice.