Stocks quoted in this article:
The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this morning is Tesla Motors Inc (NASDAQ:TSLA), which was targeted by weekly call buyers on Monday.
Tesla Motors Inc edged fractionally higher yesterday, with the stock shrugging off news that China will exclude overseas automakers from government subsidies. The shares settled at $220.54, bringing their year-to-date advance to 46.6% -- and a batch of short-term call buyers bet on TSLA's technical resilience to continue through the end of this week.
The most active TSLA option on Monday was the weekly 7/25 230-strike call, where 5,284 contracts were exchanged. A healthy number of blocks traded at the ask price, implied volatility on the option jumped 5.9 percentage points, and open interest at the strike rose by 2,046 contracts overnight -- indicating options traders were buying to open new calls here. In fact, the International Securities Exchange (ISE) confirms a portion of the volume here was initiated by traders buying bullish bets.
Those weekly 230 calls, which are due to expire at the end of this week, traded at a volume-weighted average price (VWAP) of $1.31. If TSLA is trading above breakeven at $231.31 (strike plus VWAP) by Friday's close, these call buyers will be able to turn a profit on their positions. If not, they'll sacrifice the initial upfront premium as their maximum potential loss.
That breakeven mark is roughly 5% north of the stock's Monday close, but TSLA could be due for a short-term pop. The equity recently met up with support at its 10-week moving average, and the modest pullback pushed TSLA's 14-day Relative Strength Index (RSI) down to a two-month low of 44 on July 17.
However, the options market isn't pricing in a big rally for Tesla Motors Inc (NASDAQ:TSLA) this week. Delta on the weekly 7/25 230-strike call was 0.18 at Monday's close, implying only an 18% chance the option will expire in the money.