Pre-Earnings Bears Speed Toward Tesla Motors, Inc. (TSLA)

Tesla Motors Inc (TSLA) is down on worries about its overseas performance

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Published on Feb 11, 2015 at 2:54 PM
Updated on Apr 20, 2015 at 5:32 PM

Tesla Motors Inc (NASDAQ:TSLA) is 1.8% lower this afternoon to trade at $212.43, and option bears are expecting more downside in the wake of tonight's fourth-quarter earnings report. Specifically, puts are crossing at double the rate typically seen at this point in the session, and some buy-to-open activity can be detected at the weekly 2/13 200 strike.

By purchasing the out-of-the-money puts, the traders are banking on TSLA ending the week -- when the series expires -- south of the round-number $200 mark. However, delta on the option is negative 0.28, suggesting a roughly 1-in-4 chance the put will be in the money Friday night.

Taking a step back, put buying has been popular in TSLA's options pits in recent months. The equity's 50-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 1.09 -- just 6 percentage points from an annual high.

Short sellers have been active toward TSLA, as well. In fact, more than one-quarter of the stock's float is sold short, which would take nearly seven sessions to cover, at typical daily trading volumes.

Nevertheless, Tesla Motors Inc (NASDAQ:TSLA) has been making a comeback over the last few weeks. Since bottoming at a year-to-date low of $185 in mid-January, the shares have advanced 14.8% -- despite today's dip, which results from concerns over the company's performance in China last month. Should the equity's upward trend continue -- or the firm report better-than-expected results tonight -- a capitulation among option bulls and/or short-covering activity could add fuel to TSLA's fire.


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