Traders analyzing Tesla Inc. TSLA, -3.95% stock options are predicting a period of decreased volatility following the release of the electric vehicle manufacturer’s third-quarter results after the closing bell on Wednesday. Despite this, the stock options market suggests a potential movement of $13.66 (equivalent to 5.5% at current prices) in either direction on Thursday.
Straddle Options Strategy
An options strategy known as a straddle, which relies on volatility, entails purchasing both bearish (puts) and bullish (calls) options at the current strike prices. This strategy is currently priced in anticipation of Tesla stock moving within the aforementioned 5.5% range on Thursday. These predictions are based on data provided by Matt Amberson, principal at Option Research & Technology Services.
Comparing to Previous Quarterly Reports
In comparison to the average price movement of $16.03 over the past 12 quarterly reports, this estimated movement suggests a slightly less volatile scenario. Presently, with Tesla stock down 3.4% at $246.15, a buyer of the straddle strategy would earn returns if the stock price falls below $232.49 or rises above $259.81.
Historical Stock Movements
Over the past five quarterly reports, Tesla stock has experienced movements exceeding 5.5%. The average movement during this period has been approximately 9.4%.