4 Charts to Watch as Volkswagen Scandal Sinks Automakers

Ford Motor Company (F), General Motors Company (GM), Tesla Motors Inc (TSLA), and Fiat Chrysler Automobiles NV (FCAU) are in the red after the Volkswagen scandal

Sep 22, 2015 at 1:11 PM
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The Volkswagen emissions scandal is weighing on automakers across the globe. Not only did European automakers decline amid the threat of a wider investigation into "defeat devices," but U.S. car manufacturers Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), and Tesla Motors Inc (NASDAQ:TSLA) are also feeling the heat, as is Fiat Chrysler Automobiles NV (NYSE:FCAU).

But first, let's review why Volkswagen shares have plummeted this week. The German automaker -- the biggest in Europe -- admitted using software to deceive American regulators measuring diesel-car emissions, which could impact roughly 11 million vehicles (subscription required). Volkswagen could face billions of dollars in penalties, not to mention lawsuits and subsequent legal fees, as regulators and politicians around the globe zero in. Volkswagen has set aside 6.5 billion euros to cover costs, and CEO Martin Winterkorn -- rumored to be hitting the bricks -- is asking for forgiveness. 

F is down 4.1% at $13.74. The stock is now 1% lower in September, and in danger of ending the month beneath its 50-month trendline for the first time since August 2012. The options crowd is likely pleased, as the security's 50-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at an annual high of 0.51. Simply put, option buyers have picked up Ford puts over calls at an annual-high clip during the past 10 weeks.

150922F

 

GM -- no stranger to scandal -- is down 2.4% at $29.88. The stock has shed 14.6% in 2015, running into recent resistance at its 10-week moving average. GM option players are bracing for a steeper drop, it seems, with intraday put volume running at 1.5 times the norm. It looks like speculators are buying to open the November 26 put, which will move into the money if GM breaches $26 by the close on Friday, Nov. 20, when the options expire.

150922GM

 

TSLA -- which could be facing competition from Apple Inc. (NASDAQ:AAPL) -- has surrendered 1.9% to sit at $259.18. It looks like some options traders might be selling calls to bet on a short-term ceiling for TSLA, with out-of-the-money weekly 9/25 calls accounting for a healthy part of the intraday action. In fact, the stock has backed down from the $270-$280 on several occasions since early 2014.

150922TSLA

 

Finally, FCAU said its U.S. unit doesn't use "defeat devices," and that it will work closely with authorities to make sure vehicles are compliant. The shares are down 5.6% at $13.34, and are poised to end the week beneath their 50-week trendline for just the second time this year. There are plenty of skeptics likely cheering, as short interest represents 16 sessions' worth of pent-up buying demand, at FCAU's average pace of trading.

150922FCAU

 

 

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