Who’s Who in $TSLA today

Hopefully you caught the fact that I used the Tesla stock symbol in the headline and understand that I’m referring the action in the stock market today on $TSLA.

News over the past 24 hrs has hit an extreme negative. You can do a search on CNBC.com for “Musk” and read all about it…

TSLA news

If you’re wondering who’s trading this stock you’re not alone.

Looking at the options activity and Average True range of this stock might help you figure it out.

Volume on the $202.50 call which expire at 1:00pm Pacific time today has steadily been increasing during the first two hours of trade. The high on the day for these calls is $2.81 although most of the volume happened when the price was around $1.80 today.

TSLA_9.2($202.50C)

However, the volume on the $197.50 puts have been much heavier than the calls. The high of the day on these puts is $2.65 although most of the volume happened around $1.00 today.

TSLA_9.2($197.5_P)

The Average True Range of $TSLA right now is $5.25. The Average True Range is the degree of price volatility. Basically, this is the average price high to low over the course of time. So far, the stock high of today $203 and the low $197.60, which is approximately the Average True Range. Unless more negative news comes out it’s likely that $TSLA will close somewhere between the high and low here.

Big point. If the stock closes between these options strikes, $197.50 and $202.50 the sellers of these options will make money because these options will be worth nothing! That means that the options sellers will keep the combined premium they collected by selling these puts and calls ($1.00 + $.180 = $2.80). Selling these calls and puts requires a lot of capital and there is risk but the data is showing that the “smart money” side of the trade are options sells.

Note: the volume on the put strike is about 30% higher than on the call side. This probably means that the “smart” money is hedging their bet to the down side or a bunch or speculators, retail investors and shareholders who think this news matters are scared!

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