Tesla Motors Inc's (TSLA) Wild Ride Has Option Bears on Edge

Tesla Motors Inc (NASDAQ:TSLA) tagged a nine-month low earlier, but was last seen comfortably higher

by Karee Venema

Published on Jan 14, 2016 at 2:34 PM
Updated on Jun 24, 2020 at 10:16 AM

It's been another wild day for Tesla Motors Inc (NASDAQ:TSLA) shareholders. Earlier, the stock tagged $193.38 -- a nine-month low and its first foray south of $200 since August -- amid possible headwinds from troubled Fiat Chrysler Automobiles NV (NYSE:FCAU). However, the stock bounced back in intraday action, and was last seen up 3.1% at $206.50.

In the options pits, meanwhile, put players have taken control, with the contracts crossing the tape at two times the average intraday rate. Considering tomorrow is standard options expiration, the January 2016 series is hot. In fact, three of TSLA's five most active options are puts that expire at tomorrow's close -- and collectively account for roughly 37% of the stock's total put volume.

Widening the scope reveals short-term speculators have been quite fond of puts. Specifically, TSLA's Schaeffer's put/call open interest ratio (SOIR) of 1.37 sits in the 73rd annual percentile, meaning speculators are more put-heavy than usual among options expiring in three months or less. Getting even more specific, the stock sports a front-month gamma-weighted SOIR of 3.04, which indicates near-the-money put open interest more than triples call open interest in the January 2016 series.

Drilling down, these traders have targeted the 200 strike, which is home to peak put open interest among front-month options. According to the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the majority of positions have been bought to open here in recent months. In other words, traders have been rolling the dice on TSLA breaching the $200 mark by tomorrow's close.

At last check, though, delta on the put was lingering near negative 0.17, suggesting a slim 17% chance of an in-the-money finish at expiration. As a point of reference, the shares of Tesla Motors Inc (NASDAQ:TSLA) have not breached this round-number mark a closing basis since April 2. Should the stock maintain its foothold atop $200 through week's end, though, the most the put buyers stand to lose is the initial premium paid.

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