As income traders, we love to sell options on stocks with rich premiums…
First Solar ( ) is the premier solar design and installation company. No, they will not come to your house to install panels but they are the world’s largest supplier of large-scale solar systems for electric power companies and industry.
Solar energy, in general, and FSLR, in particular, has been doing well and should continue to do so based on valuations and general sentiment about the sector, despite the retaliatory effects from the recent tariffs threats on Chinese goods.
I like the company and the stock has been running higher based on fundamentals and recognition on Wall Street that renewables are now cost effective in many places. The company was expecting to report earnings and the premiums were gigantic.
So, we sold a put option 8 days out on the FSLR April (4/27) 67.50 strike and collected between $0.80 and $0.85 per share or $255 selling 3 contracts.
We we expected to close the trade early before First Solar announced earnings but the stock was running and we left the trade on. FSLR beat earnings and the stock price took off and we watched our sold put option expire worthless.
We’ll take it. $255 of cash, a sweet 1.2% return in 8 days or 41% on an annualized basis.
The run on First Solar isn’t over yet. Let’s do this again…and you can join us.
About The Author
Michael Shulman is a 30 Year Veteran of the financial markets – as a trader, a financial analyst, a financial writer and most recently as an educator.
Mr. Shulman made his first option trade in 1985 – COMPAQ Computer calls – a position that expired worthless. His second trade broke even; the third brought him a year’s salary, a near twenty to one return on his investment. He has never looked back. He entered the financial publishing business formally in 2001 as director of research for ChangeWave Research’s institutional research business and as the writer and editor of Hedge Fund Investing.
He has published two books – Sell Short and Made in America – both of which can be found on Amazon.com, and he is a frequent contributor to reputable financial sites like Seeking Alpha, MSN, MainStreetInvestor, and Traders Reserve.
Most importantly, since 2010, he has dedicated himself to teaching income investors how to get more income from their portfolios using simple yet safe options selling strategies which produce income every week. This approach was developed from the ground up in Mr. Shulman’s own accounts, his goal to develop a strategy that cannot be replicated by institutional investors of any size and therefore independent of fads and trends that change too often to provide a consistent approach for individual traders.
His trade recommendations in his Options Income Blueprint, Perpetual Income Portfolio Club and Income Masters services maintain a 98% success ratio, meaning his trades produce the expected income 98% of the time. No one’s perfect.