Tesla Motors, Inc. (TSLA) Rally Electrifies Short-Term Bulls

Weekly options were popular on Tesla Motors Inc (TSLA) yesterday


Published on Jan 23, 2015 at 10:46 AM
Updated on Apr 20, 2015 at 5:32 PM

Tesla Motors Inc (NASDAQ:TSLA) closed 2.6% higher yesterday at $201.62, after one Morgan Stanley analyst -- during an interview on CNBC -- recommended buying the shares. In the options pits, calls outstripped puts by a slim margin, as traders honed in on extremely short-term contracts.

In fact, nine of the 10 most active TSLA strikes belonged to the weekly 1/23 series. Digging deeper, the weekly 1/23 205-strike call saw some buy-to-open activity, as speculators wagered on end-of-week upside. Specifically, the buyers think TSLA will close today -- when the weekly series expires -- above the $205 level.

Yesterday's activity was unusual, relative to what we've observed in recent weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). TSLA's 10-day put/call volume ratio across those exchanges is 1.17, higher than 92% of similar readings from the last year. In other words, puts have been bought to open at a faster-than-usual rate recently.

This pessimism isn't terribly surprising, considering the shares have stair-stepped their way lower since reaching a record peak of $291.42 in early September. Today, Tesla Motors Inc (NASDAQ:TSLA) is sitting slightly south of breakeven, following a price-target cut to $180 from $190 at J.P. Morgan Securities.

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