Tesla: NHTSA Recall, Volatility Surge, And Put Option


  • The National Highway Traffic Safety Administration (“NHTSA”) has ordered the recalling of ~360K Tesla vehicles.
  • The recall has pushed Tesla’s implied volatility to be near its 52-week peak.
  • As such, it has created a good setup to write put options.
  • If the option expires, it would provide a 7.2% return in about one month, translating into an annual return of nearly 86%.
  • If the option is assigned, it would provide the shares effectively at ~$190, an attractive entry price for the long term.

Call and put option trading signs



Last week, the National Highway Traffic Safety Administration (“NHTSA”) issued a recall of Tesla (NASDAQ:TSLA) vehicles. The recall would impact about ~360K of its vehicles (Model S, Model X, Model 3 vehicles, and Model Y vehicles) that are equipped with Full Self-Driving (“FSD”) Beta software.

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Source: IVolatility.com

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Source: Yahoo! data

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Source: Author based on Seeking Alpha data

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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