Summary:
- Tesla's stock falls as it lowers prices for Model S and Model X in China.
- Option traders are anticipating further declines and are focusing on the upcoming options expiration.
- Significant trading activity observed for at-the-money puts, particularly for the $225 strike.
- Bearish sentiment and cautious outlook underscore concerns about Tesla's immediate future.
Tesla's stock continues to fall as the company announces price cuts for its Model S and Model X vehicles in China. Option traders are anticipating further declines, with a focus on options expiration.
Tesla's stock faced another day of decline following the company's decision to reduce prices for its Model S and Model X cars in China. This move comes in the wake of a recent price cut on the Model 3 and Model Y. Market participants, particularly option traders, are displaying a bearish sentiment as they speculate on the potential for additional drops in Tesla's stock price.
As the week approaches an options expiration date on Friday, trading activity intensified. Notably, the most significant contracts exchanged were the at-the-money puts. Specifically, there was substantial trading activity for the $225 strike puts, set to expire on Friday. Over the course of the day, 108 out of a total of 118,000 puts were traded for this strike. These puts were valued at three dollars each as the trading session concluded.
The trend of Tesla's stock facing downward pressure due to pricing adjustments and trader speculation highlights the cautious outlook on the company's short-term performance.