Generating 6% Annual Returns Through First Solar Put Selling Strategy

First Solar Inc (FSLR) currently trades at $265.45 per share, placing it beyond the reach of some investors seeking entry points. For those willing to embrace an alternative approach, put option contracts present an intriguing opportunity to establish a position while collecting premium income simultaneously.

The Put Selling Mechanics

Specifically, the January 2028 expiration at the $170 strike level offers a bid of $21.05 per contract. By selling a put at this strike price, an investor locks in a premium that yields 12.4% return on the $170 commitment amount, translating to a 6% annualized rate. This approach, sometimes termed YieldBoost, fundamentally differs from outright share ownership in its risk-return profile.

Understanding the Trade-Off

The critical distinction lies in premium collection versus appreciation capture. When selling a put, profit is capped at the premium received—there is no participation in upward price movement beyond the strike level. The contract counterparty would only exercise their right to sell at $170 if FSLR’s price declined substantially, making the exercise more favorable than market disposal.

For the put seller to realize loss, First Solar shares would need to fall 36.1% from current levels, bringing the effective cost basis down to $148.95 per share (after deducting the $21.05 premium from the $170 strike). At that point, assignment becomes likely, and the seller assumes share ownership at a reduced entry point.

Historical Context and Volatility

Examining FSLR’s trailing twelve-month price history reveals the $170 strike positioned approximately 36% below recent trading levels. The stock’s historical volatility metric stands at 62% based on the last 250 trading days, indicating meaningful price swings that warrant consideration alongside fundamental analysis when evaluating whether this 6% annualized premium justifies the execution risk.

Strategic Considerations

Selling a put on First Solar suits investors who view the $170 price point as an acceptable entry level and are comfortable potentially acquiring 100 shares at that strike. The fixed income component provides downside protection only to the extent of the premium collected. Without a substantial price decline, the maximum benefit remains confined to the $21.05 premium received, making this strategy optimal for those seeking steady income rather than capital appreciation.