Autopilot Crash Pressures Tesla Motors Inc (TSLA)

Tesla Motors Inc (NASDAQ:TSLA) is sinking on reports of yet another Autopilot debacle, with the shares now testing a familiar area

Sep 29, 2016 at 3:29 PM
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Tesla Motors Inc (NASDAQ:TSLA) is reportedly dealing with yet another Autopilot fiasco, this time after a TSLA electric car crashed into a German tour bus. The driver said the car's Autopilot feature was engaged at the time of the crash, although a TSLA spokesperson said the customer reported that the Autopilot feature was not a contributing factor to the wreck. So far today, TSLA is down 1.9% at $202.42 to test a familiar level.

The electric auto maker has dropped 15.6% so far this year, and explored a range of more than 100 points. In fact, TSLA's current perch marks a roughly 50% Fibonacci retracement from its February lows to its April highs -- a level that contained TSLA's dip in mid-May. Meanwhile, the $190-$195 area -- a 61.8% Fibonacci retracement -- has contained the stock's past couple of pullbacks.

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In the option pits, open interest sits in the 95th percentile of its annual range. TSLA's Schaeffer's put/call open interest ratio (SOIR) of 1.03 sits lower than 79% of all other readings from the past year, indicating short-term option players are more call-biased than usual. Drilling down, the top front-month open interest position is the out-of-the-money October 220 call, where most of the contracts were bought to open. This means "vanilla" option buyers are betting on a rally north of $220 by the time the options expire on Oct. 21.

Some of this out-of-the-money call buying could be short sellers hedging, however, with TSLA's short interest up 6.4% over the last reporting period. Shorted shares now account for nearly a quarter of TSLA's float, an amount that would take 6.7 days of trading to cover, at TSLA's average daily volume.

Whatever the motive, now is an opportune time to be a Tesla Motors Inc (NASDAQ:TSLA) options buyer. TSLA's Schaeffer's Volatility Index (SVI) of 34% is currently in the bottom 7% of its annual range, suggesting near-term option traders are pricing in relatively low volatility expectations. Meanwhile, TSLA's Schaeffer's Volatility Scorecard (SVS) sits at a relatively high 84, showing that TSLA has tended to exceed volatility expectations over the past year.

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