Calls stay red-hot in First Solar

First Solar has seen its share price double in the last month, but option trades have dwarfed those gains by comparison.

On April 26, Investitute’s tracking systems found that 5,200 May $29 calls were purchased for $1.09 to $1.50 with shares at $28.77. Open interest in the strike was a mere 72 contracts before the trades appeared, showing that they were new positions.

Those calls sold for $7.20 just hours before they expired this afternoon, a gain of up to 560 percent. The stock climbed some 26 percent in the same time, a large move but one that paled in comparison to that of the options.

Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

FSLR was up 3.95 percent to close at $36.34 today. The solar-energy company, which was below $27 in mid-April, gapped higher after exceeding quarterly estimates and raising guidance on May 2.