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- First Solar (FSLR), a new member of IBD Leaderboard, has rallied sharply in recent months.
- Today’s column introduces a double butterfly options trade in First Solar stock.
- “Energy will no doubt be an integral part of a solid portfolio.” – Ken Shreve
Explore the dynamics of First Solar’s stock performance and strategic trading options.
First Solar Stock: The Set-Up
The heartbreak of First Solar in days past is alive and well in my heart (chuckle). So I’m going to position something that gives us a shot at both upside and downside. This means the trade will be inexpensive and bind risk at the same time.
Defending The Trade
Stock hunting using fundamental and price strength within the IBD methodology is where I firmly plant myself under the backdrop of the current economic backdrop. I use technical analysis to find ideal buying opportunities in conjunction with the tools for strength seen on IBD.
How The Strategy In First Solar Stock Profits
Scenarios for the First Solar butterflies:
- First Solar stock sticks in a range. Both butterflies erode to zero. This is why we set risk limits.
- Share prices expand to the north and our call butterflies grow in value.
- First Solar stock expands to the south; our put butterflies grow in value.
- There is a sweet spot with butterflies at the middle strike, so pay attention to the 170 and 210 price levels in particular.
Conclusion
With the double butterfly strategy, First Solar offers a balanced risk-reward scenario that could cater to both conservative and speculative investors. Monitoring key price levels will be crucial in maximizing potential gains or mitigating losses.
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