Tesla Puts Pop Amid Musk-SEC Drama

The SEC has asked the Tesla CEO be held in contempt

Managing Editor
Feb 26, 2019 at 2:32 PM
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Controversy follows Elon Musk like a moth to light. Yesterday, the Securities and Exchange Commission (SEC) asked that the Tesla CEO be held in contempt over tweets that seemingly violated his fraud settlement. Today, a judge ordered Musk respond to the SEC motion by March 11. 

The order from the U.S. judge comes after Musk tweeted out this morning that "something is broken with SEC oversight." Even amid all of the drama, the shares of Tesla Inc (NASDAQ:TSLA) are nearly even on the day at $298.93, paring losses from earlier. Meanwhile, options traders are picking up puts at an accelerated pace. 

More specifically, over 124,000 TSLA puts have changed hands today -- double the expected intraday amount and nearly double the amount of calls traded. There's notable activity at the weekly 3/1 285- and 290-strike puts, where new positions are being opened. This indicates options traders could be banking on more trouble for Tesla stock by the end of the week.

This echoes the larger trend in recent weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows TSLA stock's 10-day put/call volume ratio of 1.14 ranking in the 88th percentile of its annual range, indicating a much healthier-than-usual appetite for bearish bets of late. Options are an ideal way to bet on more upside for TSLA, too, with the security's Schaeffer's Volatility Index (SVI) of 44% ranking in the 16th percentile of its annual range.

After a swift rejection earlier this month, Tesla stock has been guided lower by its descending 30-day moving average. This has led to only three positive sessions in the last 10 days, and brings its year-to-date deficit up to 10.6%.

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