Tesla Motors Inc (TSLA) Options Pop as Musk Puts Model 3 Rumors to Rest

Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk said Panasonic, not Samsung, will provide batteries for the Model 3

Jun 8, 2016 at 11:42 AM
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Tesla Motors Inc (NASDAQ:TSLA) options volume is soaring today, running at two times what's typically seen at this point. Puts and calls are crossing in near parity, and short-term options are in high demand. In fact, all 10 of TSLA's most active options expire in the next six weeks. This accelerated options activity comes as Tesla stock jumps 1.6% at $236.13, after CEO Elon Musk effectively put to rest recent rumors of which company will be supplying batteries for the Model 3, tweeting: Drilling down on today's options activity, TSLA's June 235 and July 225 puts have seen the most action, where two symmetrical blocks were simultaneously opened on the International Securities Exchange (ISE) earlier. It looks like the front-month puts were bought, while the back-month puts were sold -- possibly creating a short put calendar spread.

Elsewhere, it appears as if TSLA's weekly 6/10 240-strike call -- which expires at this Friday's close -- is seeing a mix of buy- and sell-to-open activity. Those buying to open the calls expect the security to rally north of $240 by week's end, while those selling to open the calls are betting on $240 to serve as a short-term ceiling. Earlier, TSLA stock hit an intraday peak of $240.85, but it hasn't closed a session north of the strike -- which coincides with its year-to-date breakeven mark -- since May 2.

More broadly speaking, calls have the distinct edge over puts among TSLA options slated to expire in three months or less. Specifically, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.82 ranks lower than 88% of all comparable readings taken in the past year, meaning short-term speculators are more call-heavy than usual toward Tesla stock.

Outside of the options pits, though, sentiment is tilted in a more skeptical direction. More than half of analysts covering the shares maintain a "hold" or worse suggestion, while nearly 28% of the stock's float is sold short. Should Tesla Motors Inc (NASDAQ:TSLA) extend its recent uptrend -- the stock is up 16% from its May 12 low of $203.66 -- a round of upgrades and/or a capitulation from short sellers could translate into additional gains.

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