First Solar Inc. (FSLR) 11/3/09 PriceWatch Alert Down To $110.75 Break Even

Posted: Tuesday, November 03, 2009 8:28 AM EDT
By: Market Intelligence Center Staff

First Solar Inc. (NasdaqNM: FSLR) closed yesterday at $121.70. 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 117.91 and resistance in the 125.89 range. Technical indicators for the stock are Bearish 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 Jan '10 125 covered call (QHB AE) for a net debit in the $110.75 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 9.00% downside protection and a 12.87% assigned return rate for a 63.46% 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 50 Call (XOL AJ) and selling the Jan '10 125 call (QHB AE) for a $63.65 debit. The trade has a 74 day life and would provide 6.61% downside protection and a 17.83% assigned return rate for an 88.00% annualized return rate (for comparison purposes only). First Solar does not pay dividends at this time. [ATU-Seven Summits Research]