A Curious Dive into Tesla’s (TSLA) Dropping Shares: Levels to Watch and Open Interest
In the ever-volatile world of stocks, one name that has been making headlines lately is Tesla, Inc. (TSLA). Rick Ducat, a seasoned financial analyst, recently took a closer look at the electric vehicle giant’s chart and shared some insights that every investor should know.
The Downward Trend:
Ducat started by observing the downward trend that Tesla’s shares have been experiencing. In the past few months, TSLA’s stock price has dipped below the $700 mark, a significant drop from its all-time high of $900 in November 2021. The analyst attributed this decline to several factors, including profit-taking, concerns over Elon Musk’s tweets, and a potential economic downturn.
Levels to Watch:
Despite the bearish outlook, Ducat pointed out several key levels that investors should keep an eye on. The first level of support is around $650, which was a previous resistance level. The second level of support is around $600, which was the price at which Tesla’s stock traded during the summer of 2021. The third level of support is around $550, which is a psychological level that could act as a strong support if the stock price reaches that point.
Open Interest Levels:
But the real interesting find, according to Ducat, was the significant open interest levels in the February 28 calls and puts. Open interest refers to the total number of outstanding derivative contracts, which gives an indication of the number of investors who are either betting on a stock to rise (calls) or fall (puts). In Tesla’s case, there are a large number of investors who are betting on the stock to either rise or fall by February 28, 2022.
- February 28 Calls: There are around 110,000 call options contracts with a strike price of $800, which expire on February 28, 2022. This indicates that a significant number of investors believe that Tesla’s stock price will be above $800 by that date. However, if the stock price is below $800 on February 28, these options will expire worthless, resulting in a loss for the investors.
- February 28 Puts: There are around 130,000 put options contracts with a strike price of $650, which also expire on February 28, 2022. This suggests that a large number of investors are betting on Tesla’s stock price to be below $650 by that date. If the stock price is above $650 on February 28, these options will expire worthless, resulting in a loss for the investors.
The implications of these open interest levels are significant. A large number of call options contracts being held could indicate a potential short-term bullish trend if Tesla’s stock price rises above $800 before February 28. Conversely, a large number of put options contracts being held could indicate a potential short-term bearish trend if Tesla’s stock price falls below $650 before February 28.
Impact on Individuals:
For individual investors, monitoring these levels and trends can provide valuable insights into the market sentiment towards Tesla. If you own Tesla stocks, it’s essential to keep an eye on these levels and adjust your investment strategy accordingly. If you’re considering buying Tesla stocks, it’s crucial to factor in the potential impact of these open interest levels on the stock price.
Impact on the World:
The impact of Tesla’s stock price on the world goes beyond just individual investors. Tesla is a global company with a significant footprint in the automotive and energy industries. A drop in Tesla’s stock price could have ripple effects on the broader market, particularly in sectors related to renewable energy and electric vehicles. It could also impact investor confidence in the electric vehicle market as a whole.
Conclusion:
In conclusion, Tesla’s recent downward trend and the significant open interest levels in the February 28 calls and puts are important factors for investors to consider. By monitoring these levels and trends, investors can make informed decisions and adjust their investment strategies accordingly. Additionally, the potential impact of Tesla’s stock price on the broader market and investor confidence in the electric vehicle industry cannot be ignored.
As always, it’s essential to remember that investing in the stock market involves risk, and it’s crucial to do your own research and consult with a financial advisor before making any investment decisions. Stay informed, stay engaged, and happy investing!
