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How to trade solar power stocks

Short-seller Jim Chanos reiterated his bearish SolarCity outlook on Thursday, despite the stock closing more than 6 percent higher. But Chanos—and some "Fast Money" traders—believe the wider solar space holds long-term upside.

Chanos told CNBC he would add to his bet against SolarCity if it were easier to do, but stressed that he is not bearish on solar overall. While he would not short the stock, trader Tim Seymour noted he "certainly wouldn't be getting long here."

First Solar has blown past the broader market this year, climbing more than 44 percent. Some investors may start to reduce their exposure to the company and bet on other solar names, said trader Steve Grasso.

Solar panel installation on the roof of a home in Gainesville, Florida.
Getty Images
Solar panel installation on the roof of a home in Gainesville, Florida.

Trader Guy Adami added that shares of SunPower could rise higher into 2016, despite gains of about 7 percent this year.

The gradual move away from carbon-based energy sources bodes particularly well for Tesla Motors, said trader Brian Kelly. Beyond its electric cars, the company has bet heavily on battery production.

Disclosures:

Tim Seymour

Tim Seymour is long AAPL, BAC, BX, CLF, DIS, F, FCX, GE, GM, GOOGL, INTC, JCP, JPM, KO, LGF, RL, T, TWTR, VRX. Tim's firm is long BABA, BIDU, MCD, NKE, SBUX, YHOO.

Steve Grasso

Steve is Long AAPL, BA, BAC, CC, DD, DIS, DECK, EVGN, KBH, MJNA, MBLY, MU, OLN, PFE, PHM, T, TWTR, GDX firm is long OXY, BP, COP, CVX, FCX, NEM, RIG, kids own EFA, EFG, EWJ, IJR, SPY

Brian Kelly

Brian Kelly is long BBRY, Bitcoin, GDX, GLD, Hong Kong Dollar, TLT, US Dollar; he is short British Pound, Euro, Yen, Yuan, Canadian Dollar, GSG, EEM, EWC, EWH, KRE, SPY

Guy Adami

Guy Adami is long CELG, EXAS, GDX, INTC, Guy Adami's wife, Linda Snow, works at Merck.