Like Buying All-Time Highs? Try Tesla Motors (TSLA)

11/15/2010 10:55 am EST


Elizabeth Harrow

Director of Digital Content, Schaeffer's Investment Research, Inc.

The shares of Tesla Motors Inc. (TSLA) soared to a new all-time high last week, with the stock topping out at $30.50 earlier in the Friday session. Options players have taken note of TSLA's major move, with volume ramping up to six times the expected level. Puts have the edge in today's trading, with 6,126 contracts changing hands so far, compared to just 4,849 calls.

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However, the most active put is TSLA's November 29 strike, where 1,230 contracts have crossed the tape— 90% at the bid price, suggesting these puts were sold. With volume easily outstripping open interest at this strike, these puts were most likely sold to open. In other words, it looks like speculators are adding new neutral-to-bullish bets on the electric automaker.

Traders seemed to be reacting to comments from CEO Elon Musk, who said that he expects strong sales growth in Japan—which happens to be the home base of Toyota Motors (TM), one of Tesla's higher-profile partners.

The stock was up 7.8% on Friday afternoon, resuming a post-earnings rally from earlier this week. TSLA is now trading well north of support at its rising ten-day moving average, and its relative strength index (RSI) is currently docked at a lofty 82. This reading points to a potential short-term overbought situation, but TSLA certainly doesn't seem ready to pull back just yet.

By Elizabeth Harrow, contributor, Schaeffer’s Trading Floor Blog

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