Adam Warner, at Daily Option Report, comments on his option strategy for FSLR.
Walking On Sunshine
People of the Sun rejoice, First Solar (FSLR) re
ports tonight!And we’re seeing a familiar volatility pattern. Former Momo darling acts well, volatility hits 6 month lows so you wonder how much more options get hit once the news comes out.
Then you look at the graph below, 10 Day HV, and you can see options WAY overprice recent volatility trends. 30 day normalized options carry an 80 volatility, which is only low when you see it was twice that high last Fall. But it’s extremely high vs. 10 Day HV in the 40 range.
I’d expect options volatility to settle somewhere in the middle, maybe mid 60’s. So like pretty much every other stock these days, we know FSLR will beat their estimates, and we see the options board anticipating the standard 8-10% move.
I’m fading the volatility pumpage via the Iron Condor route, shorting OTM call and put spreads.
