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Longer-Term Call Volume Revs Up on Tesla Motors (TSLA)

TSLA sees a spike in January-dated call activity

by 2/6/2013 2:43 PM
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Tesla Motors Inc (NASDAQ:TSLA - 39.28) has been targeted by bullish speculators today, as approximately 12,000 calls have changed hands so far -- more than quadruple the norm. By comparison, just over 2,500 puts have traded. Most popular has been the January 2014 55-strike call, which has seen north of 5,800 contracts cross the tape -- most of them at the ask price, suggesting they were bought.

Digging deeper into the data, it appears that these calls were exchanged at a volume-weighted average price (VWAP) of $1.83. Since this strike is presently home to open interest of just 50 contracts -- coupled with the fact that implied volatility has climbed 2.6 percentage points during the course of the session -- it's highly plausible that new positions are being added here. Essentially, these longer-term traders are counting on TSLA to surmount the breakeven rail of $56.83 (strike price plus VWAP) by January expiration. This represents expected upside of about 44.7% to the equity's current price.

This penchant for TSLA calls over puts is par for the course. In fact, traders on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 239 calls for every 100 puts during the past two weeks. The resultant 10-day call/put volume ratio of 2.39 ranks higher than 54% of similar readings gathered within the last 12 months, denoting a slightly healthier-than-usual appetite for bullish bets over bearish.

The electric vehicle manufacturer is off to a promising start in 2013, having advanced about 16% year-to-date, and outshining the S&P 500 Index (SPX) by 11 percentage points during the past 60 sessions. Meanwhile, a look at the charts shows that the stock continues to trade well atop its ascending 10-week moving average, which has served as support since early November.

At last check, TSLA is up 3% to wink at the $39.28 level.


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