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Chinese solar stocks continued their free fall Tuesday in the wake of Monday’s revelations from Suntech, the world’s largest solar panel maker, that it may have been the victim of a $690 million fraud.

I’m long two of their converts, the 3’s of ’13, and taking a beating on price. But out of sheer dumb luck, I’m also long 15 of their puts, the 1.00’s of ’13, and making make some money there.

...the company may need intervention from China to avoid bankruptcy. “There’s no way they’re selling more stock here -- who’s going to buy it?” The Chinese “government will orchestrate some sort of buyout,” probably by a state-owned enterprise, because the country doesn’t “want to see Suntech go away. But it’s not a viable operation right now. It’s not solvent. It needs to re-cap.” Suntech’s American depositary receipts fell 16 percent to $1.13 at the close in New York, the lowest since they began trading in December 2005.

As of 6:49 EST today, Aug 1, the stock is lower still at $0.95, and the bonds aren't being offered by E*Trade (nor, presumably, by anyone else at the moment, though the last price was 45 on heavy volume). It will be interesting to see how this plays out.
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