I bought to close three Evergreen Solar (ESLR) Jan '10 5 calls for $2.95. I sold them back in August for $6.40. That's a profit of $3.45 per contract. Of course, I'm down on my underlying shares. My cost basis is $9.34. With ESLR trading around $6.29 a share, I'm up around $0.40 a share on paper.
Solar stocks tumbled today. As I'm writing, First Solar (FSLR) is down around 9.25%, Suntech Power (STP) is down around 10.8%. My own ESLR is down 16.54%. All these stocks have been falling the past few weeks. The alternative energy industry is in a precarious state, as I commented in August.
Today's huge drop looks a bit silly to me. According to a Lehman analyst, as reported by the AP, "the recent solar sell-off seems to have been partly triggered by an overall market and commodity sector drop and a misinterpretation of some recent comments made by a solar executive." Old news is apparently being treated as something new.
I'll be looking for ESLR to rebound, at which point I'll sell some more calls. I was going to roll my calls when the Jan '11 LEAPs were available, but I just couldn't pass up the opportunity to lock in my call write profit.
Congress will hopefully get its act together and renew the alternative energy tax credits later this month.