Unusual Options Activity: Tesla Motors (TSLA)

Shares of Tesla Motors (TSLA) slid under $200 this week. The stock is now at a five-month low and under its 200-day moving average. One trader sees a short-term bounce in the weeks ahead.

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  • That’s based on the December 1 $200 call. With 30 days until expiration, 3,323 contracts traded compared to a prior open interest of 169, for a 20-fold rise in volume on the trade. The buyer of the calls paid $11.60 to make the bullish bet.

    With shares trading right around $200, this is an at-the-money trade. Shares will need to rise faster than the options lose time value to profit on the trade. Such a move is possible, given the big moves that Tesla shares tend to deliver.

    The company reported a 43 percent drop in earnings growth. Rising competition and price cuts are starting to impact Tesla’s profitability.

    Action to take: Investors may like shares at current prices, given how far down they are from their highs and how oversold they are in the short-term. They can likely see a low-double-digit gain from here.

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  • For traders, the December call is a short-term bet on a rally higher in the coming weeks. That seems likely to play out given how oversold shares have gotten in the short-term. Traders may want to take quick profits on any gain, and target mid-double-digit returns.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.