TSLA Options rank 7th among all listed single stocks for total volume over the past month- with average daily volume near 130,000 contracts and more than 700,000 contracts of open interest outstanding.
Yesterday TSLA literally caught fire -- with a video showing the battery compartment of a model S on fire hitting youtube before 2pm and becoming widely noted in the early afternoon. Shares sold off violently from $185 to 175 in about 30minutes and TSLA quickly issued a press release explaining the fire was caused by an accident, but the volatility has persisted as traders both pro and retail began to jump in and out of the stock.
Option flow caught fire as well in the last 90mins of the day- with nearly 300,000 contract trading by end of session--the 5th busiest day ever for the name. The volume and volatility chart shows ends in a clear X where the vol and p/c skew spike as shares decline, and current implied volatility is well over 65% in all terms- which implies daily moves near 3% for the forseeable future.
Is this the end of the bubble-like run for TSLA shares? Or is this simply a pause for a company that is revolutionizing and set to dominate the auto market. That's the $64,000 question here. My feeling is that shares will continue to whip- but that the fire issue will be extinguished quickly. For traders who like the fast lane (ok, sorry, no more auto puns) I'd consider the one-day Oct 4 160-165 put spread sale. Bid about $0.70 on the screen, the trade might require a strong stomach, but present a pretty simple 6:1 risk/reward that will play out over the next 36 hours, or so.
OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits
Henry can be followed on Twitter at twitter.com/OptionAlert
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV