Friday, April 26, 2013

Did the Tesla Motors Inc. Tweet Spook the Bears? (TSLA)

As we repeated in April 3's "Tesla: The Knives Come Out, Stock Drops 8% (TSLA)" (after the last time Mr. Musk did the tweet thing):
A financing program?
Elon, Elon...underpromise, overdeliver, not overpromise...

The perils of social media exposed.
From Schaeffer's Research:
The shares of Tesla Motors Inc (NASDAQ:TSLA) are bucking early broad-market headwinds, touching a record high of $53.74 after another notable tweet from the company's chief executive. What's more, options traders are once again picking up extremely bullish bets, either to roll the dice on a significant short-term rally, or to protect their short positions.

Most notably, the stock's deep out-of-the-money May 65 call has seen about 750 contracts change hands at a volume-weighted average price (VWAP) of $0.78. Ninety percent of the contracts traded on the ask side, and implied volatility was last seen 4.1 percentage points higher, hinting at buy-to-open activity.

As alluded to earlier, the call buyers have one of two motives: to profit from a 24.4% rally north of $65.77 (strike price plus VWAP) within the next few weeks, or to insure their bearish bets. Currently, short interest accounts for a staggering 42.4% of Tesla Motors' total available float, and would take nearly eight sessions to buy back, at the equity's average pace of trading. By purchasing calls, the shorts can lock in an acceptable price at which to repurchase their shares, should TSLA skyrocket in the near term.

Whatever the motive, today's affinity for out-of-the-money calls merely echoes what we saw on Wednesday, when traders honed in on the May 60 and 65 strikes....MORE
After hitting a new all-time high of $53.74 the stock is now up 3 cents at $52.03.