Options Bears Take Aim at Tesla Stock

Tesla just broke ground on its China gigafactory

by Patrick Martin

Published on Jan 7, 2019 at 11:35 AM

Tesla Inc (NASDAQ:TSLA) made headlines today after the company broke ground at its Shanghai gigafactory, where it plans to produce its Model 3 vehicle by the end of the year. At the same time, Barclays chimed in on the stock, noting that any falloff in Model 3 U.S. delivery numbers could be offset by strong European sales, though it kept its bearish $210 price target and "underweight" rating. 

The automaker's options activity is also worth mentioning. Tesla is on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest options volume during the past 10 days, with names highlighted in yellow new to the list. In the last two weeks, 522,649 calls have changed hands on TSLA, compared to 576,376 puts.

MAO Tesla

Looking at data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows that puts have been increasing in popularity in the last two weeks. TSLA stock's 10-day put/call volume ratio of 1.18 ranks 4 percentage points from an annual high, indicating a much healthier-than-usual appetite for bearish bets of late.

Echoing this, Tesla's Schaeffer's put/call open interest ratio (SOIR) of 2.27 also sits in the 96th percentile of its annual range, indicating that near-term traders have rarely been more put biased in the past 12 months. 

Looking back, the shares bottomed near $250 back in October, only to soar near $380 as recently as mid-December. At last check, TSLA was up 4.7% to trade at $331.82 today, hovering near its 12-month breakeven point. 

MAO Tesla Chart

Tesla's roller coaster ride has proven too much for some shorts. Short interest fell by 7.5% in the two most recent reporting periods to 26.65 million shares, the lowest since September 2016. Still, this accounts for a hefty 20.7% of TSLA's total available float, and 3.5 times the average daily trading volume. 

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