Bears score again with $TSLA

Bearish option traders turned huge profits today in downside positions opened in Tesla.

On May. 3, Investitute’s tracking systems found that 9,000 Weekly $240 puts expiring on May 24 were bought for $6 as part of a bearish roll with shares at $254. This was clearly a new position, as the volume was well above the strike’s previous open interest of 492 contracts.

Those puts traded up to $29.20 this afternoon, nearly 5 times their purchase price. The stock fell 16.94% in the same time frame, a large move but nowhere near that of its options on a relative basis.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

TSLA traded lower from its open to close down by 7.58% at $211.03 today, a new 52-week low. Shares of the electric-car maker came under pressure after CEO Elon Musk told employees that all expenses would be examined in a “hardcore” attempt to reduce costs, as well as car fires in China raising concerns about the safety of electric vehicles’ batteries.