Musk Tweet Has Tesla Stock Rallying Into Key Technical Resistance

TSLA options traders have been more bearish than usual in recent weeks

Apr 13, 2018 at 10:31 AM
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Shares of Tesla Inc (NASDAQ:TSLA) are trading up 1.8% at $299.29, after CEO Elon Musk replied to a report in The Economist criticizing the electric car company's cash flow. Specifically, in response to an article entitled "Tesla is heading for a cash crunch," Musk tweeted, "Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money."

This is the second time this month Tesla has attempted to ease liquidity concerns. And since bottoming at an annual low of $244.59 on April 2, TSLA stock has bounced nearly 22%. Nevertheless, the shares are running out of steam near the round $300 mark -- a 50% Fibonacci retracement of their late-February to early April decline -- and are on track for their sixth weekly loss in seven.

Options traders have been bracing for more downside, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TSLA's 10-day put/call volume ratio of 1.12 ranks in the 100th annual percentile -- meaning puts have been bought to open over calls at a faster-than-usual clip.

It's been more expensive than usual to purchase premium on short-term bearish bets, too. TSLA's 30-day implied volatility skew of 21.7% ranks in the 95th annual percentile, indicating call options are pricing in lower volatility expectations than their put counterparts at the moment.

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