Put Option Activity Spiking Ahead of First Solar Earnings (FSLR)

Speculators and options traders are keeping their bearish stance against First Solar, Inc. (NASDAQ: FSLR).  We have seen two analyst downgrades in recent days and now the PUT option volume is surging ahead of earnings.  We have seen over 50,000 puts trade just in the MARCH 2012 expiration month and that is 4-times normal.  This seems to reflect expected margin pressures as shares are down about 75% or more from the 52-week high.

In the March 2012 PUTS, we have seen over 12,000 contracts trade in the MARCH $27 CALLS with an open interest of only 758 contracts.  There have also been almost 12,000 of the MARCH $32 PUTS (versus an open interest of 14,132 contracts) and over 13,000 of the MARCH $34 PUTS (versus an open interest of only 1,763 contracts).

While it is obvious that these are all likely a part of the same trading strategy, this stands out as very unusual on the surface.

Even the MARCH $39 PUTS have seen 11,750 contracts trade against 13,441 contracts in the open interest.

First Solar shares are down 0.7% at $35.32.