A New Position

Today I purchased put options on First Solar (FSLR). This stock recently hit a high of about $72. It has been trending downward and I am thinking it might pull back enough to fill the upside gap from two weeks ago in the $59-62 area. I bought the June 80 puts (QHBRP) for $16.20 ($1,620) as FSLR traded at $64.30. Although I usually don't look too much at fundamentals, this stock has a PE of over 200 and a market cap of almost $5 billion. That is about 25 times its sales. This stock is riding the solar energy wave which is due to cool off for a while. But it is a Chinese stock, so who knows where it might go. I will risk about $1.60 or so on this trade. If it continues its downward slide, the gap should get filled. This would result in about $4.00-5.00 profit.

Respectfully, the Dow is due for a pullback as it has ramped from 12,500 to almost 13,500 without gasping for air. The S&P (500) has been on a similar tear. The NASDAQ appears to have topped and is looking to roll over, The Russell 2000 has made a short term double top and is rolling over. A correction of some significance might be in the offing and would certainly shock the slumbering Bulls. As I recall, markets only go up; well at least most of the time. So, the probable correction will be put off for eternity. Things are just too perfect for the markets to go down for very long. Hmm, I don't mind being a bit sarcastic as it keeps a shred of realism ensconced in my reasoning. Bulls have a tendency to overstay their welcome and the many who have enjoyed lusty profits become the majority that give them right back. That is the tune of Wall Street.