I am recommending we close our First Solar (FSLR) put at a loss. The stock is struggling to get back above $120, and the company is scheduled to announce earnings next week.
We entered the position in November 2021, when FSLR was trading at $111.85, and the S&P 500 was around 4,700. The broader market index is down 22% since then.
Admittedly, my timing was off. As high-beta stocks got whacked, FSLR tanked, eventually falling to a low of $59.60 on May 12. Yet, rather than take a large loss on the fundamentally sound company, we aggressively managed the position, selling puts and calls for income.
The sector got a big boost from the passage of the Inflation Reduction Act in August. The climate spending bill includes major incentives for solar power. As FSLR moved up, we rolled our puts up to generate more income, eventually, flipping our net debit to cash in hand.
I am willing to walk away to avoid next week’s earnings announcement. While the trade is a loser, our losses would have been much greater had we not aggressively managed the position.
Current Stock Price: $119.22
Cash in Hand: $0.66
Action: Buy to close the FSLR Oct Monthly (10/21) 120 Put for around $1.30, but adjust as needed to close today
Loss: $0.64, or $64 per contract