First Solar Kisses Sun

Published on November 8, 2007

First Solar Kisses Sun

November 8, 2007

(for details pls visit www.OptionPundit.net)

First solar (FSLR) reported a blow-out quarter. Congrats to those who were bullish on this. I wasn’t bullish on this and this reminds me how important it is to hedge well for any earning’s play. I mentioned it for break-out play then intraday for break-down and I also mentioned my game-plan for earning’s speculation. I was looking for about 10-14% move on upside and about 25% on downside. Here is an update on my FSLR trades:

  • Purchased straight Nov 135and 140 puts in 3:2 ratio for $0.85 and $1.30 respectively (Debit $5.15/trade)
  • Sold all Nov 135 puts for $1.16 and half of 140puts for $1.85 (Credit: $5.35/trade)
  • Gain +$0.20/trade (x-commissions) plus half of Nov 140Puts

fslr-transactions-nov-7-2007.png When FSLR opens tomorrow my remaining Nov 140 Puts will be almost worthless. I added this less risky way of playing earnings into my strategy toolbox to play earnings. Now for reader’s benefit let me share what worked for this trade.

  • FSLR was on a breaking point and was following a well disciplined upward channel.
  • It was a bearish day hence FSLR was under pressure and there was a big intraday movement for me to take advantage of.
  • I am not aware of any “theoretical” models to predict this, but I know from my experience IV for momentum stocks rises tremendously towards the market close (before any major announcement). Been there, done that, time and time again.
  • Greeks helped me spread the risk and I wanted the trade to be risk-free which it did towards the market close when I locked in profits from cheaper (Abs$) options.

FSLR after market.gifFSLR is up +23% in the after market action. Assuming momentum remains strong at the opening as well, I am looking for a resistance in $210 area. I may choose to trade intraday depending upon general market conditions. If I am around my trading desk, I shall send you an alert.

If you haven’t yet done, check your e-mail (for OP’s E-Alerts). I sent out 2 imp notes. One was about my position on FXI and other one was about general market. Do remember to check that out. I wish I could have sent FXI one a little earlier so readers could take advantage of it. Those who could see e-mail in-time and benefited, all the best. Let’s see how does US market open. Hang Seng is down over 1,000 points. When market opens, and if FXI falls (I am looking for 180 area), I shall book profits even before “dust”settles.

It was a fabulous day for me personally, OPN is reaching to the north of +30% of the month of Nov. Despite broader market being slaughtered, my portfolio grew at a very respectable pace. If every thing goes fine, once I close, I shall open Nov portfolio for x-subscriber’s viewing as some may find it hard to believe. I have been warning for the past few days/weeks and hopefully I helped save (if not make) some money for my readers.

Trade Carefully and trade profitably, OP

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