Embattled Tesla Stock Hammered By Options Bears

TSLA weekly puts are quite popular today

Managing Editor
Jul 5, 2018 at 2:24 PM
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Tesla Inc (NASDAQ:TSLA) stock continues to find its way into the news, whether it's colorful CEO Elon Musk going on Twitter rants, or rumors that the company pulled brake tests to meet its Model 3 production goals. In response to the flurry of headlines, options traders have taken a decidedly bearish tone towards the electric car name. 

Specifically, put volume has been more accelerated than usual today. Around 166,000 puts have changed hands so far -- almost double what's typically seen, and pacing for the 98th percentile of its annual range. Most popular today is the weekly 7/6 300-strike put, where it appears new positions are being opened. This indicates options traders are scrambling to bet on Tesla stock dipping below $300 by the time the options expire tomorrow.

However, today's appetite for short-term puts merely echoes the recent trend. TSLA sports a Schaeffer's put/call open interest ratio (SOIR) of 1.80, in the 98th percentile of its annual range, showing an extreme put-skew among near-term options traders.

Echoing that, CNBC's Jim Cramer today noted that TSLA has "too many shorts." Indeed, although short interest fell by 4.6% in the most recent reporting period, nearly 30% of TSLA's total available float is sold short. 

At last check, Tesla stock was down 0.5% to trade at $309.30. The security has bucked the broader automaker surge today, extending Tuesday's drop. As such, TSLA is trading just below its year-to-date breakeven level, and is pacing for its worst week since March 30. The drop today has the shares on pace to end below their 50-day moving average for the first time since late May. 

TSLA Stock Chart

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