Tesla Stock Stalls After Model 3 Price Cut

TSLA is set to breach a trendline today

by Patrick Martin

Published on Dec 24, 2018 at 9:18 AM
Updated on Dec 24, 2018 at 12:53 PM

The shares of Tesla Inc (NASDAQ:TSLA) are down 2.6% in electronic trading today, after it was reported the company had cut the price of its Model 3 vehicle in China. This is the third time in the past two months Tesla has reduced the price of the vehicle. 

Tesla stock started December off strong in the wake of a big bull note. Last week, however, was the electric car name's worst weekly drop since Sept. 7. On the charts, TSLA is now set to open around $311, an area home to its pre-bear-gap levels from early October and the shares' year-to-date breakeven level. The stock is also pacing for a fall below the 200-day moving average.

Short sellers have been heading for the exits lately. Short interest fell 8.6% in the last two reporting periods to 27.36 million shares, the lowest amount since October 2017. However, this still represents a hefty 21.5% of TSLA's total available float. 

In the options pits puts have been popular lately. Looking at data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio sits at 1.12, showing a distinct preference for put buying over call buying during the past two weeks. What's more, this level of put buying relative to call buying is highly unusual, and in fact this reading ranks in the 94th annual percentile.


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