A couple of solar trade ideas from PSW Member Chat:
I have been looking over solar plays and JASO seems to be the least-scary Chinese maker. If the financials are to be believed, they made $900M in 2015 but seem to be more like $700M this year but that's OK as the stock at $5 gives them a market cap of $239M. Of course it's hard to tell with an ADR what you are really getting but I like them enough to take a poke in the STP:
- Sell 20 JASO June $5 puts for 0.70 ($1,400)
- Buy 50 JASO June $4 calls for $1.30 ($6,500)
- Sell 50 JASO June $6 calls for 0.40 ($2,000)
That's net $3,100 on the $10,000 spread and we'll see how it goes but I think $5 is a good floor to play off.
CSIQ/Jel – I didn't know about the Chinese mfg, very interesting. The question is, will China's renewable energy stimulus affect them as much as JASO. I think it will be good for them, China just wants to see Chinese factories running.
CSIQ has nice long options so let's make them a play for the OOP:
- Sell 20 CSIQ 2019 $10 puts for $3 ($6,000)
- Buy 20 CSIQ 2018 $10 calls for $4.30 ($8,600)
- Sell 20 CSIQ July $15 calls for $1.35 ($2,700)
That's going to be a net $100 credit on the $10,000 spread that's $5,500 in the money to start – gotta love that. Our worst case is owning 2,000 shares for $10 ($20,000) and, since CSIQ is Canada-based, I'm not as worried about them going down the tubes as I would be about a pure China play.
If all goes well, we make $10,100, which is an 1,100% return on our cash and the margin on the short puts is just $2,128 – so it's a super-efficient trade as well.
