Tesla Motors Inc (TSLA): Short Preview of Earnings Based on Options Trading


On Thursday, after the bell, Tesla Motors Inc (NASDAQ:TSLA) will report its second quarter earnings, which, at 8%, is expected to be lower than both the four quarter average of around 12% and eight quarter average of around 11.5%. A possible reason for the lower implied move is the low volatility in Tesla Motors Inc (NASDAQ:TSLA) in recent times, which has been 30 day realized volatility only around 30. While the Street awaits to see Tesla’s earnings figures for the last quarter, Risk Reversal has conducted a short analysis on the stock to provide a preview of the company’s earnings.

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The past 18 months have seen Wall Street analysts having different thoughts regarding Tesla Motors Inc (NASDAQ:TSLA), throughout the stock’s huge move. Among the recommendations, most analysts have a ‘Hold’ rating on Tesla Motors Inc (NASDAQ:TSLA), followed by ‘Buy’ and ‘Sell’ ratings. The average 10 month target price for the stock is $231.

The last six months have seen a gradual decline in short interest in Tesla Motors Inc (NASDAQ:TSLA), to about 30% of the float. Tesla Motors Inc (NASDAQ:TSLA) has a total float of about 81 million shares. Even with a Tesla Motors Inc (NASDAQ:TSLA) stalling since February, Tesla Motors Inc (NASDAQ:TSLA) remains up 50% year-to-date.

In measuring total open interest, Tesla Motors Inc (NASDAQ:TSLA)’s ‘Puts’ are ahead of ‘Calls’ by 1.2 to 1, which is not often seen for a stock which has seen so many outsized gains in the past two years. However, the past month has seen average volume favor calls, at a rate of 1.25 to 1.

The market is currently bullish. Around 4,000 of the September 270 ‘Calls’ were sold by a trader at 3.50 to close, and 4,000 of the September 255 calls were bought for 6.10 to open. The August 16th 200 ‘Puts’ and the 275 ‘Calls’ have over 5,000 in open interest. It can be concluded that the 200 strike provides the most interest among options traders.

Disclosure: none

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