Shares of Tesla Inc TSLA have gained over 25% in the last month. CEO Elon Musk’s recent China visit sparked excitement among investors and traders and the overall optimism over the debt ceiling crisis and the rally in tech stocks also supported the stock.
However, the rally’s momentum has come into question, especially with the uncertainty over the Federal Reserve’s policy action due next week. Here’s a look at crucial trading levels priced in by the options market for the week:
1. Resistance: Tesla stock closed 3.11% higher on Friday, at $213.97, according to Benzinga Pro. Options expiring on Friday show there is a significant open interest accumulation at the $220 Call strike, indicating the level is expected to provide stiff resistance in the short term. This means the professional traders may be factoring in that the existing rally may limit itself to another 3% rise this week and some profit-taking may commence once the stock hits the level.
2. Support: Options data shows relatively higher open interest build-up at the $195 Put strike, indicating professional traders may be expecting this level to provide some support in the short term. However, the numbers are still building up and a better picture will emerge once the open interest figures improve.
Open interest numbers only provide a fair idea about support and resistance levels. Any major newsbreak or macro event could lead to significant movement in stock prices and a subsequent shift in open interest levels.