We were assigned shares of First Solar (FSLR) last week, but I held off on recommending a call to see how investors would respond to this week’s earnings report.
That turned out to be the right move as the stock is up big today following the announcement. The company easily beat analysts’ earnings estimates, with net profit more than doubling in the second quarter. Management did lower its full-year earnings guidance slightly due to rising freight costs.
I am recommending we sell the $90 call for next week to reduce our cost basis on the shares. If our shares are called away, it will be at a profit.
Note that this trade is only for people who already own shares of FSLR uncovered from a previous position.
Current Stock Price: $86.83
Cost Basis: $90.20
Action: Sell to open the FSLR Aug Week One (8/6) 90 Call
Current Option Price: $0.85-$0.95
Recommended Limit: Set your initial limit order at $0.82, but adjust as needed to sell a call today
New Cost Basis: $89.38
Expiration: After the close on Friday, Aug. 6
Potential Rate of Return: 0.7% in 25 days, or 10% annualized, if shares are called away