TSLA puts have been growing popular in recent weeks
Tesla Inc (NASDAQ:TSLA) is swimming in red ink today, last seen down 7.3% to trade at $292.16. Just when it appeared CEO Elon Musk was returning to focus on his electric vehicle (EV) company, he announced over the weekend intentions to form a new political party. Right on cue, William Blair downgraded TSLA to "market perform," while short sellers collected $1.4 billion in paper profit at last check.
Prior to today's gap lower, TSLA had been seeing a surge in options activity. The equity landed on Senior Quantitative Analyst Rocky White's list of equities with the highest options volume over the past two weeks. In the last 10 sessions, the stock has seen 14,175,441 calls and 11,807,911 puts exchanged, the second-most active stock behind Nvidia (NVDA). The most popular contract during this time frame has been the weekly 6/27 320-strike put and the 330 call in the same series.
TSLA is staring down a 27.6% year-to-date deficit, and today's price action is testing its 80-day moving average. The shares remain up 17.2% year-over-year, though the 16 of the 41 brokerages in covering maintaining "buy" or better ratings could be headwind going forward, should more analysts change their tune.
Puts are growing in popularity. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OM X PHLX (PHLX), TSLA's 10-day put/call volume ratio ranks in the 78th percentile of annual readings. Echoing this, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.09 stands in the 90th percentile of readings from the past 12 months.
Premium is affordably priced, per the stock's Schaeffer's Volatility Index (SVI) of 48% that ranks in the 5th percentile of its annual range, implying that options players are pricing in lower-than-usual volatility expectations. Plus, the security's Schaeffer's Volatility Scorecard (SVS) sits at a 83 out of 100, it tended to exceed volatility expectations during the past year.