Making a Play on First Solar

I have moved forward with a small play on First Solar (FSLR) using the $41 area as the downside target and $52.40 area as the upside target. For the downside, I am long 1x August 9 $43.50 puts and short 2x August 9 $41.50 puts for a net credit of $0.05. This one is profitable on a close above $39.50 this Friday. Anything below $43.50 and above $39.50 will be additional profit. On the bullish side, I've gone long the August 9 $50-$52.50-$54 skip/strike/call butterfly at $0.35. This play is profitable on a close above $50.35 this Friday. Combined, I am really looking for a close between $40 and $43.20, or above $50.30 Friday to see a profit. The potential reward is capped at a $2 value on the downside and $2.50 on the upside. The biggest risk is a move below $40, so I need to watch this one closely if the stock disappoints and starts to fade. SunPower (SPWR) should provide a good road map.

Nuance Communications (NUAN) Source: View Chart » View in New Window »

Nuance Communications (NUAN) has been slammed on its last two earnings announcements. There is a 6% short interest, but more interesting may be the sizeable long exposure by Carl Icahn. There is a huge gap to be filled, although today's selloff put the range of support and resistance only $1 apart at $18.50 and $19.50. My inclination would be to start looking long possibly at the October $19 calls around $1.40. One possible alternative would be to use the same call then add a September $20-$21 ratio call spread, long 1x the $20 call and short 2x the $21 call for a net credit of $0.20 to $0.30 against the long call for a total cost around $1.25. This would cap the upside around $3 but would lower the overall cost of the trade and make it worth more on a smaller move higher. I tend to favor the latter play, but I know some traders prefer to leave the big upside out there for the taking.

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