Skepticism Builds as Tesla Motors Inc (TSLA) Struggles

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

by Karee Venema

Published on Sep 2, 2015 at 11:56 AM

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 earning announcements before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

Research Exposes Shortcut to Stock Market Wins
A simple way to stop picking losers, and start cashing in like Wall Street's elite.
Cannabis Stock Rally Cut Short after Downgrade
Aurora Cannabis did receive a price-target hike from Jefferies, though
Vaccines, China Trigger Roller Coaster Week for Stocks
Moderna's vaccine captured the attention of Wall Street
Research Exposes Shortcut to Stock Market Wins
A simple way to stop picking losers, and start cashing in like Wall Street's elite.