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First Solar (FSLR) Stock Rises on Climate Change Bill
By: Schaeffer's Investment Research | August 8, 2022

• The $430 billion Inflation Reduction Act is headed for the U.S. House of Representatives

• The security sports a more than 29% year-to-date lead

The U.S. Senate passed the $430 billion Inflation Reduction Act this weekend, which includes funds to aid the fight against climate change. Renewable energy stocks are seeing a boost as the bill heads for the House, with First Solar, Inc. (NASDAQ:FSLR) last seen up 10.4% to trade at $112.48.

In response to the news, the equity received upgrades from Guggenheim and J.P. Morgan Securities to "buy" from "neutral, and to "overweight" from "neutral," respectively. The former also raised FSLR's price target to $126 from $83, noting that the shares could see 20% upside. Before today's adjustments, analysts were firmly bearish, with nine of the 13 analysts in coverage calling FSLR a "hold" or worse.

Short-term options traders have been pessimistic as well. This is per First Solar stock's Schaeffer's put/call open interest ratio (SOIR) or 0.76, which stands higher than 90% of annual readings. In other words, puts have been much more popular than usual of late.

This pessimism could be unwinding, however. So far today, 19,000 calls have been exchanged, or 10 times the intraday average, as opposed to just 2,076 puts. Most popular is the 8/12 110-strike call, followed by the 115-strike call in that same series, with new positions being opened at the latter.

Digging deeper, the shares are now trading at their highest level since April. The equity broke through a ceiling at the $78 level in late July, and now sports a 29.9% year-to-date lead.

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