Most Active Weekly Options: Tesla (TSLA)

Tesla Motors Inc option traders are rolling the dice on a post-earnings plunge

Nov 5, 2014 at 2:26 PM
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The 20 stocks listed in the table below are the names that have attracted the highest weekly options volume during the past 10 trading days. Those highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is electric car concern Tesla Motors Inc (NASDAQ:TSLA), where traders are gambling on a post-earnings pullback.

Most Active Weekly Options Table

Tesla Motors Inc will take its turn in the earnings confessional after tonight's close, and ahead of the scheduled event, the stock is down 3.1% at $231.45 -- despite the company's Model S snagging Europe's top safety rating. Longer term, though, the shares have rallied more than 54% this year, thanks to a lift from their 140-day moving average. What's more, this trendline is helping to contain today's pullback.

Option traders are paying no mind to this longer-term uptrend, with puts trading at a 59% mark-up to the average intraday pace -- and a number of speculators are rolling the dice on a breach of this steady layer of support in the wake of tonight's quarterly earnings results. Specifically, TSLA's weekly 11/7 210-strike put has received notable attention today, with 3,138 contracts on the tape at last check. The majority have crossed at the ask price, implied volatility has shot 38.1 percentage points higher, and volume outstrips open interest -- all signs of buy-to-open activity.

By purchasing these out-of-the-money puts for a volume-weighted average price (VWAP) of $3.09, traders expect TSLA to breach $206.91 (strike less VWAP) by this Friday's close, when the weekly series expires. Considering TSLA hasn't traded south of $210 since mid-June, delta on the put is docked at negative 0.20, indicating a 1-in-5 chance the option will be in the money at week's end.

Widening the sentiment scope reveals today's put activity just echoes the withstanding trend witnessed in Tesla Motors Inc's (NASDAQ:TSLA) options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 10-day put/call volume ratio of 1.02 ranks in the bearishly skewed 93rd percentile of its annual range. As my colleague Alex Eppstein noted yesterday, though, a portion of this activity could be protective in nature.


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