When high-flying stocks usually get over a $100 a share it creates many different ways to play the stock and its options. Once a stock gets over $200 or $300 then it really gets interesting on how high strike prices will go. Take First Solar (FSLR, $295.91, up $8.59) for instance which hit an all-time high yesterday of $297. The stock made a run at $300 back in December then fell to a low of $150 in January and has now doubled again.
What’s interesting is that there are May 450 calls (HJPEW, $1.20, up $0.15), June 540 calls (HJPFK, $1.25, up $0.25) and January 700 2009 calls (ZBUAX, $8.70, up $0.20) trading. The January 700 calls actually had volume of 84 contracts. Think about that for a minute. Somebody out there is getting $800 per contract for selling a 700 call and somebody out there is paying $800 for it. Amazing. That’s 400 points away from current levels.
While $300 or even $400 is a possibility, we will have to wait and see if $700 is. Google (GOOG, $455.03, up $8.19) hit a high of $750 so anything can happen. I’ve have written about both companies in the past, and I’m always fascinated by the price swings they can make.
First Solar’s is raking in big money with its solar electric power modules which converts sunlight into electricity. But they do it for a lot cheaper than everybody else The company is in a sweet spot and demand is super strong in Europe and gaining momentum globally. They are based in Arizona and are in discussions with quite a few U.S. utility companies. You can expect some news over the next several weeks or months concerning those discussions especially after the President called for a cap on emissions of greenhouse gases.
The company makes it a habit of just crushing Wall Street’s estimates and growth could come in as high as 50% through 2010. However, if the company can continue to capitalize on cost savings when compared to other firms AND grow their brand commercially on a larger basis, then I can see $400 or $500 somewhere down the road.
Other players in the sector include Trina Solar (TSL, $44.55, up $2.08), SunPower (SPWR, $99.58, $5.16), and Suntech Power Holdings (STP, $47.39, up $2.29). All four had nice runs yesterday but First Solar represents the best when compared to the rest though. I’m not going to give a price target like so many analysts try and do. As an option trader, we are feeding off the huge price swings the stock can make. This is where our Option Mentoring program really comes into play, not just with high-flyer’s but lower priced stocks as well. Do yourself a favor and order the free CD we offer: