Skepticism Builds as Tesla Motors Inc (TSLA) Struggles

Put players have had their sights set on Tesla Motors Inc (NASDAQ:TSLA) in recent weeks

Karee Venema
Sep 2, 2015 at 11:56 AM
facebook twitter linkedin


Skepticism has been ramping up on Tesla Motors Inc (NASDAQ:TSLA) in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 1.12 ranks in the 86th annual percentile. In other words, puts have been bought to open over calls at a faster-than-usual clip.

This put-skewed trend is continuing in today's trading, with puts having the slight edge over calls. Drilling down, the equity's weekly 9/4 series is popular, and accounts for each of TSLA's 10 most active strikes. Specifically, the 230-strike put has seen the majority of the action, and it appears there could be a mix of buy- and sell-to-open activity occurring.

For those purchasing new positions, the goal is for TSLA to plunge below $230 by Friday's close, when the weekly series expires. Meanwhile, those selling to open the options are hoping the $230 level serves as a short-term floor for the stock.

Widening the sentiment scope reveals pessimism is prevalent outside of the options pits, as well. Short interest rose 5% in the last two reporting periods, and now accounts for nearly a quarter of the equity's float. The stock could encounter a fresh wave of selling pressure, should shorts continue to up the bearish ante.

The scene among analysts paints a more mixed backdrop. Specifically, six brokerage firms maintain a "buy" or better rating, compared to nine "hold" or worse recommendations. Plus, the average 12-month price target of $297.53 sits in uncharted territory.

Technically speaking, TSLA has been losing ground since hitting its most recent high of $286.65 on July 20, down nearly 16%. What's more, the shares are staring up at resistance in the $245-to-$250 region, home to a recently filled bear gap.

Although the equity is up 1.2% today at $241.51 amid broad-market tailwinds -- or perhaps extended optimism over domestic auto sales -- the stock's technical troubles could be far from over. Should Tesla Motors Inc (NASDAQ:TSLA) resume its recent downtrend, a round of downgrades and/or price-target cuts could apply additional pressure.

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners