Interest on Tesla Motors Inc (TSLA) Options Hits Fever Pitch

Open interest on Tesla Motors Inc (TSLA) is at an annual high ahead of its Model 3 reveal

by Kirra Fedyszyn

Published on Mar 16, 2016 at 12:04 PM
Updated on Jun 24, 2020 at 10:16 AM

Electric car maker Tesla Motors Inc (NASDAQ:TSLA) is trading 1.1% higher at $217.02 today, after the company revealed on Twitter last night that its upcoming Model 3 will be officially unveiled on March 31. The stock has been on a tear for more than a month, but bearish sentiment is still running high, and open interest in the option pits has reached fever pitch.

Total option open interest is now perched at an annual high, with more than 1.9 million open contracts. In the front-month series -- which is set to expire at this Friday's close -- peak put open interest of 11,466 contracts sits at the March 200 strike, while peak call open interest of 10,113 contracts is located at the March 210 strike.

Looking ahead to the back-month series, put players have targeted the April 185 strike, which is home to peak put open interest of 6,962 contracts. Meanwhile, TSLA's April 235 strike is home to peak call open interest of 8,015 contracts.

More broadly speaking, speculators have been initiating long puts over calls at a near-annual-high clip in recent months. Specifically, TSLA's 50-day put/call volume ratio of 1.08 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 98th percentile of its annual range.

TSLA calls are the option of choice today, however, crossing the tape at 1.2 times their typical intraday clip, and having a healthy lead over puts. In fact, the intraday put/call volume ratio of 0.74 is lower than 87% of the past year's readings.

Regardless of whether calls or puts are in focus, now appears to be a prime time to purchase the stock's near-term options. The security has a Schaeffer's Volatility Index (SVI) of 53% -- lower than 77% of all readings in the last 12 months -- indicating that TSLA's short-term options are attractively priced at the moment, from a volatility perspective.

Technically speaking, TSLA has been on a wild ride so far this year, dropping to a two-year low of $141.05 in early February on a round of bearish analyst attention. But the shares have been on the rebound since then, up almost 54%. This recent rally has TSLA barreling into its 160-day moving average -- a trendline that hasn't topped on a daily closing basis since last October.

160316TSLA

Should the shares take out this looming layer of technical resistance, the door is wide open for the brokerage bunch to shift its skeptical stance, considering nine out of 14 firms rate the equity a "hold" or worse. Additionally, short interest on Tesla Motors Inc (NASDAQ:TSLA) accounts for more than one-third of its total available float, or nearly seven days' worth of trading, at the stock's typical daily volume -- meaning plenty of buying power remains on the sidelines.

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