Last-Minute Option Skeptics Swarm Tesla Motors Inc (TSLA)

Call sellers predict Tesla Motors Inc will remain below $230 through tonight's close

Digital Content Group
Dec 5, 2014 at 10:39 AM
facebook twitter linkedin


Tesla Motors Inc (NASDAQ:TSLA) has been a technical marvel in 2014, sporting a more than 50% year-to-date lead at $226.02. However, that didn't prevent one group of option traders from banking on a short-term technical ceiling for shares of the electric car maker.

Jumping right in, a number of last-minute traders hit the options pits yesterday, as nine of TSLA's 10 most active strikes will expire tonight. Leading the way was the weekly 12/5 230-strike call, where 7,755 contracts were exchanged. However, a solid proportion of these bets weren't of the "vanilla" variety.

The majority of the 230-strike calls traded at the bid price, suggesting they were sold. Plus, open interest added 1,001 positions overnight, making it safe to assume fresh wagers were placed -- a theory partially confirmed by the International Securities Exchange (ISE). In other words, these call writers anticipate TSLA will churn below $230 through tonight's close -- allowing the contracts to expire worthless, and the speculators to retain the initial premium received as their maximum potential profit.

A closer look at the charts reveals that Tesla Motors Inc (NASDAQ:TSLA) -- while still a technical beast -- has struggled in recent weeks. While the shares have gotten a recent lift from their 40-week moving average, they are now sitting below this trendline (located at $231.19), which could be switching roles to act as resistance.

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners