The shares of First Solar, Inc. (NASDAQ: FSLR) have started the week on a rocky note. Not only did Friedman, Billings, Ramsey & Co. downgrade the stock from Market Perform to Underperform, the alternative energy issue was also the topic of a skeptical Barron's article over the weekend.

In a note to clients, brokerage firm Friedman cited weak polysilicon prices and the stock's overrich valuation for its downgrade. FSLR closed last Friday at $191.72 per share, compared to Friedman's price target of $110.

Meanwhile, the cautious Barron's write up [subscription required] observes that the Intersolar trade show begins Wednesday in Munich, and pits FSLR against many lower-priced rivals. "One leading customer says it will ditch First Solar's 'thin-film' panels if crystalline silicon alternatives keep getting cheaper.

That seems likely. Silicon prices are expected to drop another 30% by year end. First Solar profits -- and its shares -- could get cut in half," commented the financial paper.

Regions Financial Corporation (NYSE: RF) started today's trading with a resounding thud after announcing a $1.25 billion stock offering. The regional banking issue said it will offer $1 billion in common shares and $250 million in new convertible preferred shares. The proceeds will address roughly half of the $2.5 billion in capital Regions was instructed to raise by the U.S. Treasury Department following its stress test results.

Despite a negative start to the session, RF has since ticked fractionally higher. The security has shed more than 34% of its value in 2009, and it's currently struggling under the weight of resistance from its 32-week moving average. Since 2007, RF has managed to notch just one weekly close above this steadily descending trendline.

As Jon Ogg reported, Allergan, Inc. (NYSE: AGN - option chain) rallied sharply on Tuesday amid rumors that GlaxoSmithKline (NYSE: GSK) was mulling a takeover bid. Speculative investors jumped all over the news, as option volume on AGN skyrocketed well beyond normal levels yesterday. Interestingly enough, it seems that some traders took advantage of the stock's surge to initiate new bearish positions.

Specifically, AGN on Tuesday saw 15,850 puts cross the tape, which represents about 14.5 times its average daily put trading volume. Meanwhile, 59,943 call contracts changed hands, marking 11.5 times the norm.

When Potash Corp. of Saskatchewan (NYSE: POT) fell from its June 2008 peak of $241.62, it fell hard. The stock bottomed out at $47.54 in early December, marking an 80.3% decline from peak to nadir. The shares have recently shown signs of life, though, having gained 78.7% during the past two months.

Even more compelling, POT closed last Friday atop resistance from its 20-week moving average for the first time since August, and appears poised to do so again this week. So, with the stock rallying back from its lows, why are investors gravitating toward bearish bets?

Lennar Corporation (NYSE: LEN) saw its shares plummet nearly 20% last Friday after Barry Minkow's Fraud Discovery Institute alleged that the homebuilder was improperly inflating its balance sheet, but the company isn't taking his inflammatory claims lying down. The beleaguered housing issue announced today that Minkow and his Fraud Discovery firm have been named as defendants in "a lawsuit alleging libel, extortion, and various criminal acts."

The official company statement reveals that Minkow & Co. are being added to a pre-existing lawsuit filed againt Nicolas Marsch III, who is accused of "hiring Minkow and his company to use any means available, including fraud, identity theft and manipulation of securities markets, to wrongfully and falsely harm Lennar's business and reputation because Lennar refuses to accede to Marsch's demands for tens of millions of dollars."

Unfortunately for Lennar, its dramatic rejection of Minkow's allegations isn't doing anything to boost its share price. The equity lost 8.8% today, easily outpacing the decline in the broader equities market. LEN has now shed roughly 31% since last Friday.

Meanwhile, in the options arena, put volume continues to dominate -- during the past 10 days, traders on the International Securities Exchange have bought to open 2.6 puts for every call. This ratio is hovering just 15 percentage points from an annual bearish peak.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

Reading through Nassim Nicholas Taleb's tome, The Black Swan is a tough slog but investors who bought into his strategy for protecting against plunging markets are celebrating their good fortune. (Taleb's book is about highly unexpected events -- the "black swan" refers to the formerly widely held belief that all swans are white which European explorers dispelled when they discovered black swans in Australia.)

Investors in Taleb's $3 billion Universa hedge fund made returns of 65% to 115% in October. How did Universa do this? Universa buys far-out-of-the-money put options on stocks and stock indexes, betting on sharp market falls. Universa keeps 90% of assets in cash so it either breaks even or loses small amounts in most months while waiting for black swans. One Universa killing: American International Group (NYSE: AIG) puts. In late July, it paid $1.29 apiece for AIG put options, which were going to pay off only if AIG stock fell below $25 a share by September (AIG common traded at $26 on July 31st). Universa eventually sold its puts for $21 apiece.

Should you try to replicate Taleb's strategy? It depends. If you believe that the worst is over and other hedge funds are already copying the strategy, then the answer is no. If you think that the markets have further to fall, but that other kinds of stocks will prove most vulnerable, you can buy out of the money puts on those stocks. I am glad to see that someone is making money in this horrible market. Why shouldn't you?

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns AIG securities.

Merrill Lynch (NYSE: MER) is recently down 31 cents to $46.32.

MER call option volume of 16,496 contracts compares to put volume of 49,275 contracts. MER April 30 puts ($16 out of the money) have traded 191 times on transaction volume of 20,899 contracts, above its open interest of 19,719 contracts.

MER April option implied volatility of 70 is above its 26-week average of 46 according to Track Data, suggesting hedging for downside risk.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Crocs (NASDAQ: CROX), manufacturer of those ubiquitous, brightly colored plastic shoes (I like to think of them as a modern-day "Jelly Shoe"), reported earnings after the closing bell today. Altogether, the announcement was a mixed bag of tricks and treats.

Third-quarter net income sprinted higher to $56.5 million, or 66 cents per share, more than doubling year-ago results. YAY! The results were 3 cents above analysts' earnings estimates. Double YAY!

Revenue was also solid, spiking 130% to $256.3 million! But this headline figure failed to match analysts' estimates of $258.4 million. OH.

There was a broad based rally in the market today with the Dow Jones industrial Average pushing through the 14,000 level to close at 14,087.55.

The NYSE had volume of 3.3 billion shares with 2,503 shares advancing while 789 declined for a gain of 145.22 points to close at 10,184.5. On the NASDAQ, 2 billion shares traded, 2,144 advanced and 868 declined for a gain of 39.49 to 2,740.99.

Walgreen Company (NYSE: WAG) fell $7.08 (-15%) to $40.16 as fourth quarter profits fell on lower generic drug reimbursements. Hasbro, Inc. (NYSE: HAS) rose $1.93 (7%) to $29.81. CVS Caremark Corporation (NYSE: CVS) fell $2.48 (-6%) to $37.15 in sympathy with Walgreen's. Garmin Ltd. (NASDAQ: GRMN) fell $12.17 (-10%) to $107.23 as Nokia Corporation (NYSE: NOK) purchased Navtec, potentially integrating GPS into cell phones and making Garmin's popular dash top units obsolete.

In options there were 4.7 million puts and 5.6 million calls traded for a put/call open interest ratio of 0.83. General Electric Company (NYSE: GE) saw heavy volume on the December 40 calls (GELH) with over 34,400 options trading. American Tower Corporation (NYSE: AMT) saw heavy volume on the January 50 calls (AMTAJ) with over 20,900 options trading. AK Steel Holding Corporation (NYSE: AKS) saw heavy volume on the October 35 puts (AKSVG) with over 50,800 options trading but this may have also been related to the heavy volume on the November 40 puts (AKSWH) which moved a similar volume with 50,700 contracts moving.
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Kevin Kersten is an Options Analyst with InvestorsObserver.com. Disclosure note: Mr. Kersten owns and or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about.

Market action stayed in a range falling into the red, pushing into the green then closing mixed. Oil prices ended the day higher and the Fed seemed to calm some fears with its speeches.

The NYSE had volume of 2.8 billion shares with 1,274 shares advancing while 2,022 declined for a loss of 28.8 points to close at 9,457.64. On the NASDAQ, 1.8 billion shares traded, 1,079 advanced and 1,949 declined for a loss of 6.59 to 2,559.11.

Stocks moving today included: Krispy Kreme Doughnuts (NYSE: KKD) fell $0.67 (-17%) to $3.24 hitting a new low after poor results. Countrywide Financial Corp (NYSE: CFC) lost $1.00 (-5%) to $17.21 after large shareholders left. Office Depot Inc (NYSE: ODP) traded lower $0.92 (-5%) to $18.88 continuing its slide after Goldman cut estimates Friday. RadioShack (NYSE: RSH) traded lower $1.00 (-5%) to $20.89 as retail stocks were weak. Netflix (NASDAQ: NFLX) fell $.64 (-4%) to $17.40.

In options there were 4.9 million puts and 4.9 million calls traded for an evenly balanced put/call open interest ratio of 0.99. CBOE S&P 500 Volatility Index (NASDAQ: $VIX) saw heavy volume on the September 30 calls (VIXIF) with over 34,500 options trading. Activity on the 30 calls could represent fear that the market may fall. Options can be both bought and sold, a market crash would cause the VIX to rise so a purchase of calls would represent an insurance policy against downward movement. The General Motors (NYSE: GM) saw heavy volume on the January 42.50 calls (GMAV) with over 25,000 options trading. Intel (NASDAQ: INTC) saw heavy volume on the September 25 calls (INQIE) with over 20,600 options trading. Citigroup (NYSE: C) saw heavy volume on the October 45 puts (CVI) with over 24,700 options trading. S&P Depositary Receipts Trust ETF (NYSE: SPY) saw heavy volume on the September 140 puts (SFBUJ) with over 21,400 options trading.

Kevin Kersten is an Options Analyst with InvestorsObserver.com.

Although they spent most of the day in the green the indexes gave up ground through most of the session to close just in the red.

The NYSE had volume of 3.6 billion shares with 1,612 shares advancing while 1,706 declined for a loss of 6.18 points to close at 9,428.86. On the NASDAQ, 2.2 billion shares traded, 1,426 advanced and 1,685 declined for a loss of -2.65 to 2,542.24.

EMC Corporation (NYSE: EMC) rose $1.33 (8%) to $19.05; ahead of it's subsidiary VMware making its debut on the NYSE tomorrow in an IPO that analysts are predicting will be big. EMC will retain 90% of the shares. This is likely the reason for the active calls as EMC Corp. (NYSE: EMC) saw heavy volume on the August 19 calls (EMCHT) with over 56,000 options trading.

Centex Corporation (NYSE: CTX) fell $2.78 (-7%) to $35.63. Lennar Corporation (NYSE: LEN) fell $2.53 (-7%) to $32.92. Brinker International (NYSE: EAT) rose $1.82 (7%) to $28.98. The Goodyear Tire & Rubber Company (NYSE: GT) rose $1.70 (6%) to $28.95.

In options there were 5.4 million puts and 5.8 million calls traded for a put/call open interest ratio of 0.92. The CBOE Volatility Index has been high closing today at 26.57. This is the fear indicator of the market. Not only is the index up, but options on the index are high with the CBOE S&P 500 Volatility Index (NASDAQ: $VIX) moving volume on the August 25 calls (VIXHE) with over 35,000 contracts.

Other stocks with active options include State Street Boston (NYSE: STT) saw heavy volume on the November 75 calls (STTKO) with over 60,000 options trading. Most of the active puts were on the indexes and the iShares Russell 2000 ETF (NYSE: IWM) had volume on the August 78 puts (IOWTZ) with over 86,000 options trading.

Kevin Kersten is an Options Analyst with InvestorsObserver.com. Disclosure note: Mr. Kersten owns and or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about.

The pesky little options that trade in Chicago, Philly, and Amex can provide quite a few insights for investors if you can pick out the important data early enough. It is always hard to judge the reasoning and intent of options traders, but it looks like there is growing conviction that there could be some large developments at Time Warner before mid-January.

Time Warner Inc. (NYSE:TWX) has gone back under $20 and that makes the further apart strikes more interesting to analyze. TWX Shares did well in 2006 because of activist-instigated strategies and the restructuring, but the recently released earnings and buyback announcement were trumped by the company backing off of previous growth expectations inside AOL. This unit is still far too valuable to just spin off entirely, but yesterday I laid out the scenario that seems the most likely -- AOL gets relaunched as the "AOL" ticker on NYSE as a tracking stock with Time Warner still holding the vast majority of shares.

Wendy's International Inc. (NYSE: WEN) overall implied volatility increases as WEN reviews strategic options.

• WEN is recently up $2.47 to $40.70.
  
• WEN announced "formation of a special committee of independent directors to review strategic options to enhance shareholder value on 4/26/07."
  
• WEN May option implied volatility is at 40 and June is at 39; above its 26-week average of 23 according to Track Data, suggesting larger risk.

IDM Pharma Inc. (NASDAQ: IDMI) options active and prices valued for Risk into 5/9 FDA outcome.

• IDMI is recently down $2.82 to $5.98.
  
• IDMI will hold a conference call on 5/9 to discuss the outcome of the U.S. Food and Drug Administration Oncologic Drugs Advisory Committee meeting for Junovan (treatment for non-metastatic respectable osteosarcoma).
  
• IDMI call option volume of 2,689 contracts compares to put volume of 2,364 contracts. IDMI May 5 straddle is priced at $3.60 according to Track Data, suggesting large price risks.

Option volume leaders today are: Dendreon Corp. (NASDAQ: DNDN), Elan Corp. (NYSE: ELN), Citigroup Inc. (NYSE: C) and Alcoa Inc. (NYSE: AA).

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Buffalo Wild Wings-(NASDAQ: BWLD) volatility decreases as BWLD rallies 14% on upside EPS. BWLD, owns, operates and franchises 439 restaurants featuring chicken wings. BWLD is recently up $9.09 to $73.93. SMH Capital reiterated its Buy rating and raised its 12-month price target to $84. SMH Capital says "The robust cash balance of over $8 a share and strong franchise partners should fuel that unit development at an annual clip of 15%- 17%." BWLD call option volume of 4,230 contracts compares to put volume of 3,057 contracts. BWLD over all option implied volatility of 38 is below its 17-week average of 41 according to Track Data, suggesting decreasing risk.

Chipotle Mexican Grill, Inc.-(NASDAQ: CMG) option implied volatility decreases as CMG rallies 18% on upside EPS. CMG, an operator of over 500 companies owned and eight franchise fast-casual Mexican restaurants, reported 1st quarter revenues increased 26.2% to $236 million. CMG is recently up $11.81 to $78.07. CIBC says "CMG delivers big Upside despite tougher comparisons...Foiling shorts." CMG June call option implied volatility is priced at 25, puts are at 33; near its 26-week average of 27, but below yesterday exaggerated level of 38-44 according to Track Data, suggesting decreasing risks. CMG puts are more expensive than calls because CMG is difficult to borrow.

Option volume leaders today are: MasterCard (NYSE: MA), Cisco Systems (NASDAQ: CSCO), Intel Corp. (NASDAQ: INTC) and Newmont Mining Corp. (NYSE: NEM).

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.