Sold 1 Put on First Solar

📉 First Solar Gaps Down – A Trade Opportunity?

I like to trade stocks that have experienced a large gap, especially when it’s a quality name. Today, First Solar (FSLR) — a very strong stock — gapped down over $35 and is now trading around $141 as I write.

Why do I like trading gapping stocks? Because the gap increases volatility, and volatility increases option premiums. That gives me a chance to collect higher premiums for short-term trades. Most large gaps are news-driven, and that’s exactly what we saw this morning with FSLR.

Shares of solar-power companies dropped sharply after the U.S. Senate proposed phasing out solar tax credits by 2028 as part of President Trump’s “big, beautiful bill.”

📊 Gaps Create Patterns and Opportunities

Gapping stocks often follow technical patterns, such as: Gap and go: continues in the direction of the gap. Or, Gap fill: reverses and closes the gap during the day.

In FSLR’s case, I believe this move was reactionary and exaggerated. The stock closed yesterday at $175.25, so this $35 drop seemed overdone. Often when that’s the case, the gap partially or fully fills. That seems to be happening already — I sold the Put when the stock was at $140.50, and as I write, it’s trading around $145.

Risk Factor: 2 (Low)

Sold to Open
1 FSLR 6/20/25 $135 Put @ $2.25 → +$225
Premium Collected: $225
Stock price at entry: $140.50

My hope is that the stock continues to rebound and the Put expires worthless — that’s my preferred outcome. As with most of my trades, I’m in it for the premium.

Gaps may seem risky at first glance, but with the right stock, a clear catalyst, and proper risk management, they can be great short-term opportunities. I’ll continue to monitor FSLR closely as the week unfolds.

If the stock is put to me at $135, I’m comfortable owning it — and I’ll look to sell a covered Call to collect additional premium. That’s part of my overall strategy: use volatility to my advantage, whether I’m trading options or managing a position that gets assigned.

 

📈Successful trading,

Steve

The Options Coach