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Tesla Motors Inc option bears are gambling on a short-term slide
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 Tesla Motors Inc (NASDAQ:TSLA), where traders are rolling the dice on a short-term stumble.
Tesla Motors Inc is in recovery mode today -- up 0.3% at $248.44 -- after slumping nearly 4% yesterday following a pair of mixed analyst notes from Morgan Stanley. Today's rebound comes after Global Equities Research waxed optimistic on the electric car concern, saying the stock's recent pullback has created a buying opportunity. Additionally, the brokerage firm reiterated its "overweight" rating and $385 price target -- territory yet to be charted by the shares.
In the options pits, calls and puts are trading neck and neck this afternoon, with roughly 26,000 contracts seen on either side of the aisle. Most active is TSLA's November 250 call, which is seeing a mix of buying and selling activity ahead of tomorrow night's front-month expiration. Meanwhile, on the put side, the stock's weekly 11/28 245 strike has received the most attention, with 3,424 contracts on the tape.
A healthy portion of these puts have traded at the ask price and volume outstrips open interest, suggesting some of today's activity is of the buy-to-open kind. Traders' profit will accumulate on a move south of breakeven at $241.90 (strike less the volume-weighted average price of $3.10), while losses are limited to the initial cash outlay, should TSLA settle north of the strike at next Friday's 1:00 p.m. ET close, when the series expires.
From a wider sentiment perspective, long puts have been preferred over calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio of 0.93 ranks just 9 percentage points from an annual bearish peak. Good news for these put buyers -- as my colleague Alex Eppstein noted yesterday -- Tesla Motors Inc's (NASDAQ:TSLA) short-term options are relatively inexpensive at the moment.