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Most Active Options Update: Tesla Motors Inc (TSLA)

Tesla Motors Inc option activity accelerates as the stock hits a record high

by 8/13/2014 1:44 PM
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The 20 stocks listed in the table below have attracted the highest options volume during the past 10 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 today is Tesla Motors Inc (NASDAQ:TSLA), which is seeing accelerated activity in the wake of a fresh record peak.

Most Active Options Table

Despite mixed reviews of its Model S sedan from Consumer Reports, Tesla Motors Inc has rallied more than 5% from last Friday's close at $248.13 to trade at $261.03. What's more, earlier today, TSLA hit a new record high of $265.64.

In the stock's options pits, overall activity is running at a 41% mark-up to the average intraday pace. Despite this accelerated demand, TSLA's 30-day at-the-money implied volatility fell to a 52-week low earlier, and was last seen down 3.9% at 35.9%.

The most active TSLA option is the August 265 call, where 9,744 contracts have changed hands. This volume has been split on both the ask and the bid sides, pointing to a mix of buying and selling activity. With volume outstripping current levels of open interest, it appears both long and short positions are being initiated here. By buying to open the calls, the goal is for TSLA to finish the week north of $265, while those selling the calls expect the stock to close south of the strike at week's end -- a level that roughly coincides with today's technical peak.

Meanwhile, sell-to-open activity has also been detected at TSLA's August 270 call. By writing these higher-strike calls, traders are giving TSLA a little more wiggle room to the upside through week's end. Specifically, the goal is for Tesla Motors Inc (NASDAQ:TSLA) to settle south of $270 at Friday's close, when front-month options expire. In this best-case scenario, the calls will expire worthless, and the speculators can retain the initial credit collected as their maximum potential reward. Should the equity continue its record-setting run, the call writers could be at risk of assignment, and face theoretically unlimited losses.


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