Tesla's Put Options Demand Rise as EV Giant Struggles to Boost Sales: Options Chatter
$Tesla (TSLA.US)$ is seeing increasing demand for put options that can shield their holders against a potential slump as the electric vehicle giant continues to struggle to revive sales.
About 1.14 million put options changed hands with less than an hour left into the trading day, up from 883,000 contracts a day earlier and the 20-day average of 967,167 contracts.
Tesla unveiled a lower-priced version of its Model 3 car in Europe on Friday, a few months after releasing it in the U.S., as the electric vehicle giant attempted to reinvigorate demand, according to a Reuters report.
Earlier this week, Reuters also reported that registrations of new Tesla cars fell more than 50% in France and Sweden in November amid increasing competition from Chinese manufacturers, Reuters reported earlier this week. Registrations were down more than 40% in Denmark, the Netherlands and Portugal.
Tesla’s implied volatility rank was at 4, near the low-end of a range that goes as high as 100. That means options are relatively less expensive compared to its level over the past year. Implied volatility, which measures the market’s expectations of a stock’s potential price changes with variables including options premiums, was at 51.76%, down from 74.2% on June 23, when shares climbed 8.23%.
The lower cost of buying downside protection is bolstering the appeal of put options. An active buyer paid a premium of about $11.7 million for put options that give their holder the right to sell Tesla shares at $440 in 378 days. That strike is more than $15 below the current stock price, signaling the buyer’s fear that Tesla shares could slide.
Despite persistent weakness in Tesla shares, the stock has risen almost 60% over the past three months amid optimism that CEO Elon Musk’s plans to turn the company into the market leader in robotaxis and humanoid robots could boost revenue.
That promise was the main motivator for shareholders who approved Musk’s $1 trillion pay package, which could pay out should the company reach targets including an almost six-fold jump in its market capital to $8.5 trillion.
Share your thoughts on Tesla in the comments section. Do you think there’s a case to be made for seeking protection against a potential slump in Tesla shares, or are you confident that the stock can keep climbing? Let your voice be heard by voting below. And if you want to read more options columns like this one on Meta, or this one on Netflix, follow me here, where you can also find my earnings stories on some of the biggest stocks.
Disclaimer: Options trading entails significant risk and is not appropriate for all customers. It is important that investors read the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Opening new options positions close to or on their expiration date comes with substantial risk of losses for reasons that include potential volatility of the underlying security and limited time to expiration. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period. Certain complex option strategies carry additional risk, including potential losses that may exceed the original investment amount. If applicable, supporting documentation for any claims will be furnished upon request.
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Luzi Ann Santos
Moomoo Senior News and Community Manager
Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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75873691 : q.
電車粉 : 1,400 units of 440 put, at a unit price of 83.50. In fact, as long as there is a slight pullback of $20 in the next two months, it would already yield substantial profits.
Slay2dudes : ok
74368292 : The magnitude of the increase is narrowing, while downward pressure is intensifying, unless Tesla makes desperate efforts to support the stock and drive it up, the share price will continue to rise.
tatsu-4028 : Such options exist, and there are indeed people who will buy again! Tesla will continue to rise, fueled by this.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
73959187 : Movements in the options market are often overinterpreted by the media.
A large investor buying protection does not necessarily mean they are bearish; while someone may buy puts, another might be selling puts.
In fact, movements in the options market typically reflect risk management rather than directional forecasts.
電車粉 電車粉 : Over a weekend, 83.5 → 89, 6 million pocketed... Can we observe whether it has already been settled and exited?
Tnnd, having money is really nice