Tesla Motors Inc. (NASDAQ: TSLA) is set to report earnings on Tuesday and all eyes are going to be on the electric car maker’s results. Expectations will be very high because shares were up about 8% on Monday, and Tesla’s shares are literally up about 400% so far in 2013.
What stands out even more is the stock options trading in the name. Monday’s stock options trading was almost insane. One trade that stood out was a weekly call option trade that will expire this Friday in the $230 stock price. Keep in mind that the stock closed at $175.20 on Monday. We consider this to be a very low probability bet because the closing price was only $0.22 for that option contract. The closest speculative strike prices trade for closer to $8.00 per contract. There was also action in the $220 and $215 weekly call options.
There are bearish options trades that went off as well. There were active trades in the $145 and $140 put options. Even the $120 weekly put options were active.
24/7 Wall St. has looked at the options trading of the nearest speculative contracts. These are the $180 weekly calls and the $170 weekly puts. When you consider that the strike price is $5 away in either direction and average out the premiums, options traders are calling for a move of up to $14 in either direction.
One reminder we would make is that Tesla trades at roughly 100 times the expected earnings for 2014. Elon Musk himself recently warned in a Bloomberg interview that the stock price is value at a higher price than the company deserves. Also, with a $21 billion market cap, it is valued at about 40% of General Motors Co. (NYSE: GM) and almost one-third of the value of Ford Motor Co. (NYSE: F).
The key difference in Tesla versus Ford and GM is not just in the market cap analysis. Tesla is expected to have just over $3 billion in revenue in 2014. Ford’s 2014 revenue estimate from Thomson Reuters is $146 billion. GM’s consensus estimate for 2014 revenue is up at $165.6 billion.
Tesla is a trading stock at the moment. Those who are betting on it longer term are not evaluating this for 2013 or for 2014. They are looking out to 2016 or even 2018, and much of that bet is on Tesla getting a base model car out in the $30,000 or so range.