Q2 STOCKS TO BUY

Puts Hot as Tesla Motors Inc (TSLA) Pans New Lows

Tesla Motors Inc (NASDAQ:TSLA) hit a two-year low earlier, after UBS cut its price target

Feb 5, 2016 at 2:59 PM
facebook X logo linkedin


Shares of Tesla Motors Inc (NASDAQ:TSLA) have plunged 8.7% to linger in two-year low territory at $159.66, after UBS slashed its price target by $30 to $160 -- the lowest on Wall Street. Specifically, the brokerage firm expressed concern over TSLA's 2016 deliveries due to lower-than-forecast Model X SUV production, as well as high costs associated with selling, general, and administrative expenses and research and development. Against this backdrop, TSLA's options pits are buzzing, and with the stock on the short-sale restricted list, put players have the upper hand.

Overall, volume is running at two times what's typically seen at this point in the day, with 89,000 puts versus 73,000 calls traded. Amid this accelerated activity, TSLA's 30-day at-the-money implied volatility hit a 52-week high of 79.9% earlier. The stock's weekly 2/5 series is hot -- accounting for seven of TSLA's 10 most active options -- with buy-to-open activity detected at the 160- and 165-strike puts. In other words, eleventh-hour bears expect TSLA to extend its retreat through tonight's close, when this series expires.

From a wider sentiment perspective, it's been call buyers who have been active in TSLA's options arena in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 1.13 ranks in the 69th annual percentile. However, with 28.5% of the stock's float sold short, though, some of this call buying could be a result of shorts initiating hedges.

Regardless of the motive, with TSLA slated to take its turn in the earnings confessional next week, volatility expectations are high. Specifically, the stock's Schaeffer's Volatility Index (SVI) of 77% sits 11 percentage points from a 52-week peak. In other words, premium on the equity's near-term options is relatively expensive at the moment.

Today's activity both on and off the charts just highlights TSLA's recent struggles. In fact, UBS is just one more brokerage firm recently to question Tesla Motors Inc (NASDAQ:TSLA) over the production of its Model X. As such, the shares have surrendered roughly one-third of their value in 2016, and are on pace for their lowest weekly close since January 2014.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

 
 

“Buy This Stock Now!” - Expert Who Called 11x On TSLA

He called a rare 11x on Tesla…

But now, thanks to Elon & Trump’s new alliance…

He says there’s a new opportunity that could be 1,000x BIGGER than Tesla – and it could completely revolutionize a $23 Trillion market.

It’s trading for less than $5 per share right now…

But it won’t be under the radar for long.

Discover The 1,000x Bigger Elon Opportunity Here

GRAND SLAM COUNTDOWN

 
 

Featured Articles from Trusted Partners:

👀Learn How Dividends Create Passive Income for Life
Receive $200 Off Motley Fool Epic. The Motley Fool Epic $299 discounted offer is based on $499/year list price. Introductory promotion for new members only. Take control of your money and your portfolio with Motley Fool Epic.

💵New Income System Could Pay You $4,243 Monthly
You could collect an average of $4,243 per month starting as early as next week with a new payout system for income investors. New registrations are being accepted for investors who want to be in a position to start with their first payout next week.

🚀Easy 92% Crypto Dividends (No Coins Required)
COIN stock doesn't pay a dividend... But there's actually a new way to collect a massive dividend that's indirectly based on the stock and offers a terrific monthly income (currently yielding nearly 92% on a forward basis).

🤝Free Advisor Match with Wiseradvisor.com
Don't leave your retirement to chance! Get matched with a trusted financial expert for FREE and make the most of your tax refund. Get started now.

⚠️Dennis Quaid's #1 Warning for Americans
Here's the thing: life doesn't come with guarantees. The economy shifts, markets stumble, and years of hard work could slip through your fingers like sand. But it doesn't have to be that way for you. So request a free copy of this Gold & Silver Guide that will arrive right to your doorstep when you act now.

 

 
 

Follow us on X, Follow us on Twitter