Options Traders Target Resistance as Tesla Stock Bounces

Speculators are eyeing another weekly close below the 50-day moving average

May 7, 2018 at 2:50 PM
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Last week was a volatile one for Tesla Inc (NASDAQ:TSLA) in terms of intraday trading, as the stock reacted to a disappointing earnings call from CEO Elon Musk -- which sparked a back-and-forth with Warren Buffett over the weekend on the importance of "moats." The swings resulted in a fractional net gain for the car stock thanks to key technical resistance, and it looks like options traders are betting on this ceiling to hold through week's end.

Taking a quick step back, more than 90,000 calls have changed hands on Tesla so far today, 1.3 times what's typically seen at this point in the day. Most active is the weekly 5/11 310-strike call, where it looks as if new positions are being sold to open. If this is the case, the goal is for TSLA to settle below the strike at this Friday's close.

The last time the shares closed a week north of $310 was in mid-March. After hitting a short-term intraday peak near $350 on March 12, Tesla plummeted to an annual low of $244.59.

And while the security has come off of here, it's continued to run out of steam in the $307-$308 region -- home to a 61.8% Fibonacci retracement of its March through April drop, as well as its 50-day moving average. Today, TSLA hit an intraday high just below $306, last seen trading up 2.9% at $302.62. More broadly, the shares are down nearly 3% in 2018.

tesla stock price may 7

Against this backdrop, Wall Street is littered with skeptics. Of the 17 analysts covering Tesla stock, 11 of them maintain a "hold" or worse rating. Plus, the average 12-month price target of $312.05 represents a slim 3% premium to current trading levels.

Elsewhere, short interest shot up 20.6% in the most recent reporting period to 38.26 million shares -- the most on record. What's more, these bearish bets account for a whopping 30.5% of the stock's available float.

 

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