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The shares of Tesla Motors Inc (NASDAQ:TSLA) are defying broad-market headwinds, up 2.2% at $167.78 this afternoon. As such, demand for TSLA's short-term options is once again on the rise, with 30-day, at-the-money implied volatility (IV) up 1.8 percentage points at 63.1% -- the highest since Aug. 7, which was just ahead of the company's earnings release.
Overall, TSLA has seen 72,000 calls and 70,000 puts change hands -- a mark-up of 43% to the stock's average intraday volume. Weekly contracts remain the options of choice, with speculators employing both calls and puts to place neutral-to-bullish bets.
Digging deeper, the weekly 8/30 170-strike call has seen around 8,500 contracts cross the tape at a volume-weighted average price (VWAP) of $3.08. The majority of the calls traded on the ask side, IV is 5.4 percentage points higher, and volume has exceeded open interest at the strike, hinting at buy-to-open activity.
By purchasing the calls to open, the buyers expect TSLA to muscle north of $173.08 (strike price plus VWAP) -- a new all-time high -- by the end of the week, when the options expire. Should the shares remain beneath the strike through Friday's close, the buyers will forfeit the initial premium paid for the calls. . Of course, considering 27% of TSLA's float is dedicated to short interest, it's possible the shorts are buying out-of-the-money calls to hedge their bearish bets.
Meanwhile, the weekly 8/30 160-strike put is the most active on the day, with nearly 11,500 contracts exchanged on open interest of fewer than 6,350 contracts, pointing to fresh initiations. However, a healthy portion of the puts traded on the bid side, suggesting they were sold.
By writing the puts to open, the sellers expect TSLA to stay atop the $160 level through the end of the week. In this best-case scenario, the puts will remain out of the money, and the sellers can pocket the initial premium received -- around the VWAP of $2.13. If the stock makes a sharp move lower and breaches $160, the sellers could be assigned, meaning they'd be on the hook to buy TSLA shares at $160 apiece.
On the charts, Tesla Motors Inc (NASDAQ:TSLA) has added more than 24% so far this month. However, the equity's Relative Strength Index (RSI) has ascended to 71 -- in overbought territory, implying the shares could run out of steam in the near term.