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These Options Traders Are Betting Against Tesla

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These Options Traders Are Betting Against Tesla

Tesla Inc (NASDAQ: TSLA) rebounded 5% on Friday following a 12-day consolidation period where the stock fell from its April 14 high of $780.79 to $666.14.

Tesla’s stock is trading down 20% from its Jan. 25 all-time high of $900.40 but up 32% from the low of $539.29 it made on March 5.

On Friday, market algorithms turned on and purchased Tesla’s shares following a report by Barron’s that suggests Tesla may produce as many as 1-million electric vehicles this year, which would blow Wall Streets’ estimate of 800,000 vehicle deliveries out of the water. Barron's also includes information that predicts Tesla's 2021 sales could hit $55 billion, which would surpass Wall Street's estimate of $50 billion in annualized sales.

Friday’s bullish move, however, didn’t deter institutions from betting a massive $57.45 million Tesla’s stock is heading lower over the next few weeks.

See Also: Why Tesla's Stock Is 'Stuck' Until One Of These Two Things Happens

The Tesla Option Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

  • At 10:19 a.m., a trader executed a put sweep, above the ask, of 781 Tesla options with a $840 strike price expiring on May 21. The trade represented a $11.97 million bullish bet for which the trader paid $153.39 per option contract.
  • At 10:21 a.m., a trader executed a put sweep, near the ask, of 741 Tesla options with a $860 strike price expiring on May 21. The trade represented a $12.89 million bearish bet for which the trader paid $174 per option contract.
  • At 10:21 a.m., a trader executed a put sweep, near the ask, of 215 Tesla options with a $860 strike price expiring on May 21. The trade represented a $3.74 million bearish bet for which the trader paid $174 per option contract.
  • At 10:21 a.m., a trader executed a put sweep, near the ask, of 741 Tesla options with a $860 strike price expiring on May 21. The trade represented a $12.89 million bearish bet for which the trader paid $174 per option contract.
  • At 11:01 a.m., a trader executed a put sweep, near the ask, of 233 Tesla options with a $720 strike price expiring on May 7. The trade represented a $836,470 bearish bet for which the trader paid $35.90 per option contract.
  • At 11:16 a.m., a trader executed a put sweep, near the ask, of 200 Tesla options with a $1050 strike price expiring on May 21. The trade represented a $7.08 million bearish bet for which the trader paid $354.23 per option contract.
  • At 11:26 a.m., a trader executed a put sweep, near the ask, of 200 Tesla options with a $1050 strike price expiring on May 21. The trade represented a $7.06 million bearish bet for which the trader paid $352.93 per option contract.
  • At 1:01 p.m., a trader executed a put sweep, near the ask, of 201 Tesla options with a $685 strike price expiring on May 21. The trade represented a $498,480 bearish bet for which the trader paid $24.80 per option contract.
  • At 1:13 p.m., a trader executed a put sweep, near the ask, of 500 Tesla options with a $550 strike price expiring on June 18. The trade represented a $490,000 bearish bet for which the trader paid $9.80 per option contract.

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

TSLA Price Action: Shares of Tesla were trading up 4.4% to $707.39.

 

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