FSLR – First Solar, Inc. – Shares in the largest builder of solar power plants in the U.S. are up sharply on Friday, rallying for a third-consecutive session to the highest level since August. The stock is currently at session highs, up 8.4% at $49.82 as of 11:45 a.m. ET.
Traders positioning for shares in First Solar to extend gains ahead of the company’s third-quarter earnings report appear to be buying the Nov 22 ‘13 $50 strike calls today, with 3,100 contracts traded thus far in the session against open interest of 60 contracts. Time and sales data indicates most of the volume was purchased at a premium of $3.30 each, with the single-largest print being a block of 2,000 calls that traded just after 10:00 a.m. this morning. Call buyers stand ready to profit at expiration next month in the event that FSLR shares rally another 7.0% over today’s high of $49.82 to exceed the average breakeven price of $53.30. Shares in First Solar last traded above $53.30 back on June 11th.
GOOG – Google, Inc. – Better than expected top and bottom line third-quarter results reported by Google after the close on Thursday launched the price of GOOG shares up above the $1,000 level for the first time on Friday, with shares trading up 13.3% to $1,007.09 by a.m. 10:10 ET.
The sharp move in the price of the underlying sparked heavy action in Google options straight out of the gate this morning, driving overall volume to more than twice the stock’s average daily options volume of around 61,000 contracts during the first hour of the session. Trading in GOOG calls is outpacing that of puts, with the call/put ratio hovering near 1.3 as of 10:20 a.m. in New York.
WSM – Williams-Sonoma, Inc. – A large ratio put spread initiated on high-end home goods retailer Williams-Sonoma on Thursday afternoon appears to be looking for shares in the name to potentially dip to the lowest level since March by November expiration. Shares in WSM yesterday rose approximately 1.0% to close at $52.86.
It looks like one strategist purchased 4,000 of the Nov $52.5 strike puts for a premium of $1.60 each and sold 8,000 of the Nov $48 strike puts at a premium of $0.30 apiece just before 3:00 p.m. ET on Thursday. The net cost of the ratio spread amounts to $1.00 per contract and positions the trader to start making money below a breakeven price of $51.50. Maximum potential profits of $3.50 per contract are available on the position should shares in WSM decline 9.0% from Thursday’s closing price of $52.86 to settle at $48.00 at expiration next month. The large options trade could be tied to a position in the underlying shares.
Williams-Sonoma may report third-quarter results on November 14th, but this date is unconfirmed as of the time of this writing.
