TSLA Analysis

Tesla Inc. (TSLA)

TSLA publishes earnings on Wednesday after the closing bell.

I shall use the APR series of options, which trades for the last time 58 days hence, on April 21.

Implied volatility stands at 46%, which is 3.9 times the VIX, a measure of the volatility of the S&P 500 index.

TSLA’s IV stands in the 41st percentile of its annual range and at the peak of its most recent broad movement.

The price used for analysis was $275.60.

Premium: $29.28 Expire OTM iron fly
TSLA   Odds Delta
Long 325.00 87.5% 16
Break-even 304.28
Short 275.00 52.2% 54
Short 275.00 47.5% 46
Break-even 245.72
Long 220.00 87.4% 9

The premium is 56% of the width of the position’s wings.

The risk/reward ratio is 0.9:1.

Decision for My Account

I like the trade, but I’m passing on it. The high price of TSLA stock would force me to commit a higher share of my trading funds than I am comfortable doing, even for a single contract. Hey, Elon Musk! Time for a stock split.

By Tim Bovee, Portland, Oregon, Feb. 22, 2017

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