Bears soak up gains in $FSLR

Bearish option traders posted exponential gains in First Solar (FSLR) today after the company announced an offering of 8.65 million shares.

Market Rebellion’s Unusual Option Activity Service flagged bearish option activity in the same strike, in two separate expirations, on two separate occasions in the past month:

–On Aug. 20, 7,000 September $67.50 puts were purchased for $0.95 to $1.14 above open interest of 140 contracts with shares at $74.81.
–On Sep. 16, 3,508 October $67.50 puts were purchased in one print for $1.80 above open interest of 137 contracts with shares at $73.64.

Those puts traded up to $3.00 and $6.04 so far today, respectively, about 3 times their prices. The stock fell as much as 15.36% at the same time, showing how quickly options can far outpace gains in their underlying shares.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

FSLR was last lower by 2.63% at $62.32 this session. The solar-energy company has declined since announcing an offering of 8.65 million shares priced at $69.00 after the closing bell Wednesday, Sep. 16.