Alternative energy stock First Solar (FSLR) has quietly been on a tear this year, up over 55%. year to date and brushing off frequent political headwinds. While the rest of the broader market struggled this month, FSLR hit a Nov. 5, 12-month high of $281.55, and is headed for a seventh-straight monthly win and fifth consecutive daily gain. Amidst this rise, Despite conventional wisdom suggesting a cooling off period, the equity is also now flashing a quantitative signal that should intrigue contrarian traders.
First Solar stock’s recent peak comes amid historically low implied volatility (IV), which has been a bullish combination for the equity in the past. According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, there have been four different times in the past five years when FSLR was trading within 2% of its 52-week high, while its Schaeffer’s Volatility Index (SVI) sat in the 20th percentile of its annual range or lower — as is the case with the security’s current SVI of 49%, which sits in the 18th percentile of its 12-month range.
Data shows the equity was higher a month later 50% of the time, averaging a 6.3% return for that time period. From its current perch at $274.43, a move of similar magnitude would put FSLR above $290 for the first time since June 2024. It would also take the security above its channel of higher highs carved out from the summer, per the chart below.
There’s also short squeeze potential. Short interest increased by 10.4% in the two most recent reporting periods, and the 9.28 million shares sold short accounts for 9.2% of the stock’s total available float. At FSLR’s average pace of trading, it would take shorts more than four trading days to buy back their bearish bets, an ample amount of buying power that can unwind and keep the wind at the equity’s back.
In the options pits, short-term puts are growing in popularity. First Solar stock’s Schaeffer’s put/call open interest ratio (SOIR) of 1.43 sits the 100th percentile of its annual range, suggesting unusually high bearish sentiment. in the options market for the company.