On the surface, the situation doesn’t look particularly grand for First Solar (FSLR), a leading global provider of photovoltaic (PV) solar energy solutions. Thanks to the complications and retaliatory impact of President Donald Trump’s tariffs, First Solar CEO Mark Widmar cited a “significant economic headwind” tied to the company’s manufacturing facilities in India, Malaysia and Vietnam selling into the U.S. market.

That comment, made during the solar specialist’s first-quarter earnings call, reflected deepening worries regarding the White House’s trade policies. “There's a lot of strategies that we could do once we understand the policy environment and the tariff environment that we're going to be in, but I don't know any of that right now,” added Widmar.

Essentially, management will be assuming a wide range of outcomes, depending on the ultimate severity and length of the tariffs. Of course, the market doesn’t care for such ambiguity, punishing FSLR stock with a sizable 9% loss over the trailing five sessions. Since the start of the year, the equity has slipped nearly 26%.

On Friday, FSLR stock made the list of Barchart’s unusual stock options volume, although the overall activity was relatively modest. Total options volume reached 40,925 contracts, representing an 8.45% lift over the trailing one-month average metric. Call volume outpaced put volume, 22,955 contracts to 17,970 contracts, for a put/call volume ratio of 0.78.

Notably, sentiment among smart money investors may be shifting positively. Earlier last week, options flow data — which focuses exclusively on big block transactions — fell to almost $12.6 million below parity for Monday and Tuesday combined. However, from Wednesday through Friday, net trade sentiment shot up to almost $9.15 million, indicating rising optimism.

All told, the bad news could potentially be baked in, presenting a tempting idea for bold contrarians.

Analyzing the Demand Profile of FSLR Stock

In a departure from traditional financial publications, I’m not going to center my thesis on FSLR stock based on certain angles or opinions. Whatever points of interest from a narrative standpoint have likely already been addressed — I wouldn’t be breaking new ground by bringing it up here.

Instead, I’d like to offer a new framework. Rather than view FSLR stock as a collection of random prices and financial performance figures, it’s more prudent to consider FSLR as transitioning across different strings of discrete behavioral states; in other words, the movement from fear to greed and vice versa.

Part of the problem of using share price as an analytical medium is that it’s a continuous scalar signal. It offers very little intrinsic meaning beyond the recording of demand at a specific point in time. For example, FSLR stock at its current price of $130.54 bears no correlation to FSLR at $41.98, its price five years earlier.

However, what we do know is demand. On any given period, the market is either a net buyer or not a net buyer. That’s it. Demand is a binary principle — it’s either happening or it’s not. As such, demand can be categorized, quantified and ultimately utilized for probabilistic analysis.

Interestingly, in the past 20 weeks, FSLR stock printed two series of “3-7” sequences: three weeks of upside interspersed with seven weeks of downside, with a negative trajectory across the period. Typically, bearishly dominated weekly streaks often resolve to the upside within a two-month span. In this case, one 3-7 sequence led to another 3-7, setting up a potential reversion-to-the-mean play.

There’s also another interesting tidbit: historically, when the 3-7 sequence flashes, a 61.4% chance exists that the following week’s price action will result in a positive return. If so, investors can anticipate a median return of 5.33%. Should the negative pathway win out, the risk is a loss of 4.03%.

Should the bulls win the narrative, we’re looking at a possible end-of-May target of $140.43. If the bears assume control, shares could fall to $123.45 by that time.

Setting Up an Aggressive Recovery Trade

For those seeking the most aggressive yet economical wager, the 138/140 bull call spread expiring May 30 could be of interest. This transaction involves buying the $138 call and simultaneously selling the $140, for a net debit paid of $85. Should FSLR stock rise through the short strike price of $140 at expiration, the maximum reward is $115, a payout of over 135%.

For slightly less probabilistic risk, you may consider the 135/138 bull call spread for the same May 30 expiration date. This trade requires a net debit of $140 and offers a maximum reward of $160, a payout of over 114%.