Wednesday, June 16, 2010

Investors Business Daily on First Solar (FSLR)

The stock closed yesterday at $117.27, up $9.74 on the day. That is a pretty fair move since we posted "Hapoalim Cuts First Solar Target to $65 on Cadmium Telluride Risk; It Won't Matter and Probably Sets an Intermediate Low (FSLR)" on June 8.

Except for family and education I don't think of anything as a 'til death do we part' investment and IBD founder William O'Neill recommends against chasing but the article below raises some interesting intermediate term points.

From IBD:
Options In Focus: Warming Up to First Solar 
Do you think conditions are ready to heat up after a month of corrective bottoming action in the likes of the broader averages? In Tuesday's second half, strong percentage gains and mixed volume could be setting up one or more of the majors for a follow-through day. That being said and taking our initial cue from some heat-seeking option action, First Solar (FSLR) may be one to do the additional homework on for positioning.

In Tuesday's session the former growth flame and current NASDAQ 100 component appears to be on the verge of developing a new weekly uptrend after a full year of moving mostly lower. Over the past three and one-half months, shares have established a weekly double bottom while clearing a long-standing downtrend from May 2009.

For their part, option traders were busy as contract volume cruised past 32,000 in mostly unsurprising action. Strong gains and shares looking to confirm the weekly pattern lows were helped along by heavy open interest and a looming June expiration. The combination set itself up for necessitated action from positioned traders looking to adjust, close or open and whether long, short or something in-between and possibilities not open to stock traders.

Checking the board for ideas, very fair-to-slightly cheap premiums in relation to FSLR's underlying volatility and implied range of the past couple months make the idea of playing a long upside and out-of-the money call more attractive than would otherwise be the case. With those potentially compromising factors less a concern, a profitable play is a bit more focused on delta and potential decay rather than vega risk for the time being....MORE