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Tesla Put Options Rise Amid Demand for Hedge Against Continued Share Price Slump
$Tesla (TSLA.US)$ put options rose amid increasing demand for protection against further share slump after the electric vehicle maker missed analysts' estimates for fourth quarter deliveries, worsening its first annual sales decline in more than a decade.
In the three months that ended Dec. 31, the company delivered 495,570 vehicles, including Model 3/Y, according to a press release Thursday morning. That's 3.1% below the average analyst estimate, according to Bloomberg data. It also trailed $BYD COMPANY (01211.HK)$'s 595,000 all-electric car deliveries for the same quarter, giving the Chinese company the top crown among global EV carmakers for the second straight time, Barron's reported.
For all of 2024, Tesla sold 1.79 vehicles, below the 1.81 million recorded the previous year. Shares tumbled 5% to $383.62 as of 12:01 p.m. in New York. That adds to an almost 13% share slump in the previous four sessions.
Put options that give holders the right to sell Tesla shares at $380 by tomorrow attracted the heaviest volume so far, with more than 71,300 contracts changing hands. That's more than five times the open interest. The price of those puts jumped 23% as the share price slump bolstered the probability that the contract will be in the money before expiration.
Before the stock sell off seen in the last few trading sessions of 2024, Tesla shares climbed to an all-time high of $488.54. While the retreat trimmed last year's advance, the stock still posted a 63% gain last year, more than double $S&P 500 Index (.SPX.US)$'s advance.
After last year's rally, Tesla shares are now trading at 179 times earnings, compared with BYD's 23 times, $Ford Motor (F.US)$'s 5.7 times and $General Motors (GM.US)$'s 5.3 times.
The "underwhelming" vehicles deliveries by Tesla was inconsistent with the "stock's elevated multiple," Vital Knowledge founder and analyst Adam Crisafulli was quoted by Bloomberg as saying.
The data showed "mediocre fundamental performance" of the core auto business, he said. Tesla's deliveries not only missed estimates but also lagged the growth seen among its peers in China, Crisafulli said.
While almost half of the analysts who cover Tesla have a buy rating on the stock, the average 12-month price target was $294.53, more than $90 below the current price. Still, it's fair to note that the analysts have underestimated the rally. Their average target price has stayed below Tesla's stock price for most of the second half of 2024, data compiled by Bloomberg showed.
There's no shortage of Tesla bulls. Wedbush analysts including Dan Ives reiterated their outperform rating on the stock and kept their price target at $515, noting that Tesla "remains the most undervalued AI play in the market," MT Newswires reported.
Wedbush analysts expressed confidence in Tesla's ability to achieve a 20% to 30% delivery growth in 2025, and launch its lower-priced EV this year.
The tug-of-war between the bulls and bears are also playing out in the options market, with unusual activities showing institutional investors and large speculators taking mixed positions.
The biggest of those unusual activities involved an active buyer paying a $16.1 million premium for call options that give the holder the right to buy 2.49 million Tesla shares at $400 each by the end of next week.
That was likely part of a multi-leg trade posted at 11:07:50 a.m. Tuesday. Another transaction posted at that exact time involved an active seller collecting a $24,900 premium for the sale of $482.50 call options expiring today. Two other trades were neutral.
Share your thoughts on Tesla in the comments section. Do you see Tesla resuming its share price rally, or do you think the stock has peaked? Let your voices be heard by voting below.
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Luzi Ann Santos
Moomoo Senior News and Community Manager
Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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Agent Smith 404 : This man child shouldn't run any American companies, in my opinion. Maybe since we're such "lazy retards" (his words) over here he can move all his operations back over to South Africa, or maybe set up shop on Mars.
SupRatt : Boo Hoo cry baby, love all of Elon’s companies and Americans are fortunate to have him in the USA. Stop trying to bet against Elon. Buying and holding since 2019 and I’m up hundreds of thousands.
Agent Smith 404 SupRatt : I'm not the one crashing out on X calling the people that made him rich, lazy, "subtards." I'm glad you made money with Tesla, but that has absolutely nothing to do with the owner going full mask off robber barron.
Chak : For example, I bought 10 shares of Tesla, on Dec 21 which I bought at $450. If the stock price rises to $485 on Dec 22 what put strike price and expiration date should I choose for an options contract to protect my profits in case the price falls below $485?
Anthony Duncan : $Bitcoin (BTC.CC)$
感恩有你 : Wait and see with keen interest.
wolfofTennessee Agent Smith 404 : The amount of absolute whining y’all do over Elon is mindblowing. Stop trading with emotions.
stderr Agent Smith 404 : Who has Elon robbed this time?
103677010 : noted
frank Crane_3546 : The most unfocused unprofessional CEO the world has seen! Meddling in US politics & now meddling in European affairs too!
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