First Solar Inc. (FSLR) 10/23/09 PriceWatch Alert Targets 66.34% Return

Posted: Friday, October 23, 2009 8:29 AM EDT
By: Market Intelligence Center Staff

First Solar Inc. (NasdaqNM: FSLR) closed yesterday at $156.08. So far the stock has hit a 52-week low of $85.28 and 52-week high of $207.51. First Solar stock has been showing support around 148.17 and resistance in the 160.83 range. Technical indicators for the stock are Bullish and S&P gives FSLR a neutral 3 STAR (out of 5) hold rating. FSLR appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Dec '09 160 covered call (HJQ LL) for a net debit in the $144.98 area. That is also the break even stock price for this trade. This covered call has a 57 day duration, provides 7.11% downside protection and a 10.36% assigned return rate for a 66.34% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the FSLR Jan '11 60 Call (XOL AL) and selling the Dec '09 160 call (HJQ LL) for an $87.90 debit. The trade has a 57 day life and would provide 5.24% downside protection and a 13.77% assigned return rate for an 88.00% annualized return rate (for comparison purposes only). First Solar does not pay dividends at this time. [FBB-Seven Summits Research]