Eleventh-Hour Option Bulls Circle Tesla Motors, Inc. (TSLA)

Tesla Motors Inc (TSLA) is bucking the trend lower, and option bulls are placing last-minute bets

by Andrea Kramer

Published on May 28, 2015 at 2:16 PM

Electric vehicle maker Tesla Motors Inc (NASDAQ:TSLA) is bucking the broad-market trend lower today, up 1.5% at $251.08. What's more, options traders are rolling the dice on even more very short-term upside for the stock.

TSLA calls have changed hands at a 30% mark-up to the security's average intraday pace, and options expiring after the close tomorrow make up the 10 most active strikes. Furthermore, the stock's 30-day at-the-money implied volatility has jumped 3.5% to 31.4%, but remains near an annual low. 

Digging deeper, it looks like eleventh-hour bulls are buying to open weekly 5/29 250-, 252.50-, and 255-strike calls -- the three most popular options thus far. By doing so, the speculators expect TSLA to be sitting north of the respective strikes by expiration tomorrow night. 

Since touching an annual low of $181.40 in late March, TSLA has advanced 38.4%. The shares are now on pace to end the month atop their 10-month moving average for the first time since November. As a result of the stock's ascent, though, its 14-day Relative Strength Index (RSI) is perched at 70 -- in overbought territory, suggesting a near-term breather could be on the horizon.

Meanwhile, short sellers have been hitting the bricks amid TSLA's advance. However, while short interest fell 7.9% during the most recent reporting period, these bearish bets still account for more than a quarter of TSLA's total available float -- representing more than a week's worth of pent-up buying demand, at the equity's average pace of trading. Should TSLA continue to muscle higher, a short squeeze could add fuel to the automaker's fire.

Off the charts, Tesla Motors Inc (NASDAQ:TSLA) traders don't seemed concerned about potential competition from Ford Motor Company (NYSE:F). Meanwhile, speculators are digesting partnerships with Southern Co (NYSE:SO) and Ireland-based Gaelectric, as well as the latest chapter in CEO Elon Musk's Hyperloop adventure.

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