Option Bulls Gear Up For Tesla Motors Inc (TSLA) Earnings

Tesla Motors Inc (TSLA) call options have been popular in the days leading up to tomorrow's earnings report

Aug 2, 2016 at 2:19 PM
facebook X logo linkedin

Auto stocks are getting absolutely demolished today following July sales results. Ahead of tomorrow night's earnings report, Tesla Motors Inc (NASDAQ:TSLA) is in the same boat as many of its sector peers. The stock is down 1.7% at $226.05, extending its losses from yesterday, which were triggered by the automaker's controversial M&A move. Below, we'll take a closer look at pre-earnings expectations for TSLA, as well as the stock's longer-term technical performance.

Looking back at the past eight quarters, Tesla stock has been a mixed bag in the immediate aftermath of earnings. While the shares have gained five times in the day following these reports, that leaves three sessions in which they've taken a step back. Last time around, TSLA dropped 5% in the trading day following its earnings results, and on average, the stock has swung 5.8% in either direction during these post-event sessions. By contrast, the options market is pricing in a much bolder 10% move for Thursday.

Based on data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), options players foresee TSLA resolving to the upside this time. Over the last 10 days, traders have bought to open 1.11 calls for every put -- a ratio that ranks in the high 71st percentile of its annual range.

From the looks of it, we're seeing more of the same this afternoon. Potential buy-to-open activity is detected at the weekly 8/5 230-, 240-, 250-, and 260-strike calls. In other words, these options traders are expecting a dramatic reversal for TSLA shares -- which are already down 3.7% week-to-date and 16.1% since their near-term highs in early April -- by Friday's close.

That said, an ulterior motive could be in play. Nearly 28% of Tesla Motors Inc's (NASDAQ:TSLA) float is sold short, leaving open the possibility that short sellers have been hedging their bearish bets via protective calls. At the auto stock's typical trading volume, it would take seven sessions to cover these positions.

Let us help you profit from market volatility. Target big gains in short order with a 30-day trial of Schaeffer's Weekly Volatility Trader!


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI