Tesla Stock Call Options Pop on Pepsi Electric Semi Truck Order

TSLA options are attractively priced at the moment

Dec 12, 2017 at 1:46 PM
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Shares of Tesla Inc (NASDAQ:TSLA) are popping today, after PepsiCo (PEP) pre-ordered 100 of the automaker's electric semi trucks -- the largest made public so far -- while Consumer Edge said the truck may generate $2-$3.5 billion in annual revenue, according to Bloomberg. And, as speculation swirls around a cryptic Elon Musk tweet, TSLA options volume is accelerated. With TSLA stock up 2.1% at $335.82, calls are in the lead as traders target even bigger gains by week's end.

By the numbers, 87,121 calls and 56,557 puts have changed hands on Tesla stock so far -- 1.7 times what's typically seen, with volume pacing in the 90th annual percentile. The December 340 call is most active with 9,155 contracts on the tape, and buy-to-open activity seems likely. If this is the case, the goal is for the security to break out above $340 by this Friday's close, when front-month options expire.

More broadly, options traders have been buying to open calls relative to puts at a faster-than-usual clip in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TSLA's 50-day call/put volume ratio of 1.19 ranks in the 77th annual percentile.

Those targeting short-term contracts are in luck, too, considering TSLA's Schaeffer's Volatility Index (SVI) of 35% ranks in the 22nd annual percentile. In other words, low volatility expectations are being priced into near-term options. Plus, the stock's Schaeffer's Volatility Scorecard (SVS) is docked at a lofty 97, meaning Tesla has consistently rewarded premium buyers over the past 12 months by making stronger-than-expected moves on the charts.

Diving deeper, Tesla stock has surged 74% year-over-year. After topping out at a record high of $389.61 on Sept. 18, the shares pulled back to successfully test their 50-week moving average, and have now closed an early November bear gap. Nevertheless, TSLA is now facing off against its 120-day moving average, which helped usher the equity higher in the first nine months of 2017.


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