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.

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Master Portfolio Trial
 


 


 
Special Offers from Schaeffer's Trading Partners