Tesla reports a profit for the first quarter on Monday, April 26th
Tesla Inc (NASDAQ: TSLA) was last slumped 1.4% to $ 731.79 when US Congress investigated the safety concerns of the automobile’s autopilot. What’s more that 2020 darling is preparing to enter the profit denomination that will publish first quarter results after close of trading on Monday April 26th. Before the event, let’s delve into the mythical Meme stock’s recent earnings history and option activity.
A look back at the past eight reports from TSLA reveals five negative post-earnings reactions, including a 3.3% decline in January. Regardless of direction, the security posted an average post-earnings swing of 7.2%. This time the options market expects a slightly above-average movement of 9.4%.
The option pits have been bullish for the past two weeks. This corresponds to the security’s 10-day call / put volume ratio of 1.67 on the International Securities Exchange (ISE), the Cboe Options Exchange (CBOE), and the NASDAQ OMX PHLX (PHLX), which is more than 72% of the readings from the past makes up year. This means that calls are answered faster than usual. In this sense, TSLA Schaeffer’s Put / Call Open Interest Ratio (SOIR) is over 8% of the measured values in the annual range, which means that short-term traders were rarely more focused on calls.
Options trading today shows a similar predilection for calls. The two most popular contracts are the weekly 4/23 calls with 750 and 800 strikes opening new positions. This implies that options traders are optimistic about the potential uptrend in the stock if those contracts expire tomorrow and new positions are opened in both places.
Even if profits are on the horizon, now seems like a great opportunity to weigh TSLA’s next move with options. The Schaeffer’s Volatility Index (SVI) of 63% is in the 14th percentile of all other values of the past year. This suggests that options players are currently pricing in lower than usual volatility expectations. What’s more, security Schaeffer’s Volatility Scorecard (SVS) ranks 96 out of 100, indicating that Tesla stock has exceeded volatility expectations over the past 12 months – a boon for option buyers.