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5 High-Energy Earth Day Option Trades

Stocks that may offer an alternative to $4 a gallon gas

By OptionsZone Experts

Green $ Trades for Earth Day

Solar Panel worker

Now 41years old, Earth Day has evolved from a heady protest against pollution to a mature reminder of man’s responsibility to Mother Earth. And with gas topping $4 a gallon in many parts of the country consumers are fed up and eager to find an alternative to fossil fuels. Further, the massive oil spill in the Gulf of Mexico and the near meltdown of several nuclear reactors in Japan has people thinking of power sources that don’t destroy the planet.

Investors are following closely firms that offer energy that doesn’t rely on dinosaur bones and split atoms. We asked our options experts to suggest trades on several of the most interesting of these stocks and exchange-traded funds. Their list ranges from First Solar (NASDAQ: FSLR) to hazardous waste clean-up firm Clean Harbors (NYSE: CLH) to Guggenheim Solar ETF (NYSE: TAN), a fund that tracks solar energy firms around the globe. And we even have a gold mining fund, a bit of a stretch, but heck, gold comes from the Earth right?

Please click through to find five high-powered Earth Day option trades.

Guggenheim Solar ETF (NYSE: TAN)

By Sam Collins, Chief Technical Analyst, InvestorPlace

Guggenheim Solar TAN logo

The Guggenheim Solar ETF (NYSE: TAN) seeks results that correspond generally to the performance, before expenses, of the MAC Global Solar Energy Index in which the fund will invest at least 90% of its assets in the stocks, ADRs and global depositary receipts (GDRs) of the index. Holdings of the fund include First Solar (NASDAQ: FSLR), GCL-Poly Energy Holdings (listed on the Hong Kong Stock Exchange), Meyer Burger Tech (listed on the Swiss Exchange), Trina Solar (NYSE: TSL), Renewable Energy Corp. ASA (listed on the Oslo Stock Exchange), and Solarworld AG (PINK: SRWRY).

For Q1 the fund was up 20.55%. Technically the shares are forming a huge saucer bottom with support at the 200-day moving average, now at just under $8, and holding just under its 50-day moving average at $8.36. The next move up should test the high at $9.00, and if it successfully breaks through it could have a quick run to $10-plus. Buy the TAN October 22 11, 8 Calls for $0.90 with a target of $1.80.

Suntech Power Holdings Co. (NYSE: STP)

By Sam Collins, Chief Technical Analyst, InvestorPlace

Suntech Power logo

This solar energy company is engaged in the design, manufacturing and marketing of photovoltaic (PV) components for the building of solar power systems. STP is the world’s largest maker of PV cells for both residential and commercial applications. It provides PV system integration for customers in China and the U.S. and sells its products in various solar energy markets worldwide. Long-term demand from China and encouragement from the U.S. authorities are all positives for Suntech. Standard & Poor’s sees China doubling its target for solar installations by 2015 and sees China-based STP as a major beneficiary because of its ties to local governments. S&P has a 12-month target of $12 for STP.

Technically the stock broke above its major moving averages in March and is holding between the two — its 200-day at $9.01 and its 50-day at $9.26. A break from this area could take the stock to $11 or higher — it appears to be an excellent choice in this industry group. Buy the STP January 21, 2012, 10 Calls at $1.20 for a target of $2.50.

First Solar (NASDAQ: FSLR)

By Chris Johnson and Jon Lewis, The Winning Edge

First Solar logo

It’s hard to say when solar is hot and when it’s not. The recent troubles for the nuclear industry should be a boon for solar, but it’s not happening. The Guggenheim Solar ETF (NYSE: TAN) has dropped steadily throughout April.

What’s worse is that FSLR, even though it’s the largest holding within TAN, has been under-performing the exchange-traded fund for more than two months. Recent issues relating to the departure of a key executive and substantial insider selling aren’t helping matters.

Now FSLR has earnings coming up next week and the stock has not done well after recent reports. In fact, the shares slumped an average of 10% two weeks after the past three releases. That’s a lot for any stock to overcome, let alone one that is already underwhelming the market. Buy the FSLR May 135 Put for around seven bucks.

Clean Harbors (NYSE: CLH)

By Chris Johnson and Jon Lewis, The Winning Edge

Clean Harbors logo

CLH provides non-nuclear hazardous waste cleanup services. The company just announced its intent to purchase Peak Energy, a Canadian energy services company.  This is the latest acquisition in CLH’s drive to enter the production end of the energy industry, especially among the shale sector.

Of course, the cleanup business is providing solid revenue. CLH was a major player in the cleanups following Hurricane Katrina and the BP oil spill. Next up could be heavy work in Japan.

The stock has been on a tear of late, gaining more than 60% since late August. Some of that may be due to short sellers running for cover. Despite a drop in short interest, there is still plenty yet to be covered, which could result in additional buying pressure.

A recent pullback of about 9% from an all-time high gives you an ideal entry point for an option play. Give the stock plenty of time to move higher by buying the CLH July 100 Call for five bucks or so.

Market Vectors Gold Miners ETF (NYSE: GDX)

By Michael Shulman, Editor, Short-Side Trader

Gold Miners ETF GDX logoIt is Earth Day — time to start digging! For gold.

In the past few weeks, as geopolitical concerns have driven up the price of gold, the SPDR Gold Trust ETF (NYSE: GLD) and the Market Vectors Gold Miners ETF (NYSE: GDX) have separated. The GDX stalled out as money shifted from one position to another. This situation will change, and as gold continues its run — due to U.S. debt crisis, the European debt crisis, the fighting in Libya, the fighting in Yemen, inflation in China — you get my point, the miners will play catch up. Look at GDX out-of-the-money calls that expire in July or later.

Article printed from InvestorPlace Media,

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