Tesla Motors, Inc. (TSLA) Bulls Circle Ahead of Battery Reveal

Tesla Motors Inc (TSLA) traders have been buying calls at a rapid-fire rate ahead of tonight's announcement

Apr 30, 2015 at 2:11 PM
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Ahead of tonight's battery announcement -- wherein CEO Elon Musk will reveal "the missing piece" -- Tesla Motors Inc (NASDAQ:TSLA) is down 1.7% at $228.45. The shares are taking a breather, it seems, after gapping higher -- and north of their 200-day trendline -- at the start of the week, as the stock's 14-day Relative Strength Index (RSI) is now perched in overbought territory at 75. Nevertheless, it looks like option traders continue to gamble on more upside for TSLA in the near term.

On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 1.53 stands higher than 90% of all other readings taken during the past year. In other words, during the past two weeks, TSLA traders have initiated bullish bets over bearish at a much faster-than-usual clip. 

In the front-month May series, the deep out-of-the-money 270 strike has garnered the most attention, with more than 3,000 contracts added in the last 10 sessions. For context, TSLA hasn't been north of $270 since September. Today, speculators are honing in on the weekly 5/1 series -- which expires at tomorrow's close --- as these short-term contracts account for eight of the 10 most active strikes thus far. 

Digging deeper, it looks like bulls are buying to open the weekly 5/1 230-strike call for a volume-weighted average price (VWAP) of $3.28. By doing so, the bettors expect Tesla Motors Inc (NASDAQ:TSLA) to muscle atop $233.28 (strike plus VWAP) by the end of the week. Delta on the call currently sits at 0.46, implying about a coin-flip's chance of the option expiring in the money tomorrow.


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