The case of 276,000 put options on Tesla with a strike of $20
On February 10th, 2021 some people on financial social media community, particularly Twitter started to notice an usual amount of activity on TSLA put options. On February 10th there were around 276,000 Tesla put options with a strike of $20 with an expiration of March 19th. That was an unusual amount and worth looking into. This article will go into finding those options on Bloomberg Terminal.
Some of the statements listed below generalize the idea about options. The statements are accurate, but they may give the idea that options can be simplified while they are very complex financial products. This document is not intended to provided financial advice.
On Feb 10th Tesla stock price was trading at around $804.82. Therefore, if you owned a Tesla Put option with a March 19th, 2021 expiration with a strike of $20. You are betting that Tesla stock will trade lower than $20 on March 19th, 2021. For that to happen Tesla stock would have to fall more than 97% by March.
At the time of the publication of this document it seems that most of the options had been sold, as of right now there is not a clear reason why this is the case. But this will show an in-depth method for finding the volume on this contract. Let’s first start by finding the Tesla Security on Bloomberg Terminal, I’ve used the DES function.
If you use the OMON function which brings up the option monitor which looks like this.
There are a couple things to look at. The top has these headers Center Strike, Calls/Puts, Calls, Puts, Term Structure, and Moneyness.
The center strike puts the strike price in the middle with call options on the left and put options on the right. You can see that in each sub-table it list: the ticker, bid, ask, last, IVM, VOLM. The bid is what buyers are willing to pay, the ask is what sellers are willing to sell at, last is the last price transacted at, IVM is implied volatility, and Volm is Volume.
We are looking for put options so we will click the Puts header which will look like this.
The way that the data is viewed is that it puts the a set of put options for different expirations. We can see the expirations for here.
Above the header we can see a couple of things: center, strikes, and expiration, Exch, and As of. Let’s first look at center and strikes. Center puts in what you want the center strike to be, and strike puts in how many options around it you want to see. So right now we have a center of $675.50 and 5 strikes which means that we’ll see 5 options with the $675.50 put option in the middle.
Expiration just tells us which contract we want to see first. The default method on terminal will the closest expiration first. You can see that Mar 19th is picked; therefore we see that first.
Exch is the Exchange that option is made on. For the most part we will not ever touch this. The only reason to see this is to look at how options get executed on different exchanges. The As of lets us pick what date we want to view the data. The default method on terminal will put the current or last (in the event that the day you view isn’t a trading day) data. We will use this because at the time of publication the options are gone, but we can change the date to find when they were there.
Let’s first change center to $20, which means that when we get the table $20 strike will be in the middle. We will change strikes to 20 which means that we are going to view 20 put options where $20 is in the middle. We don’t need to change the expiration because the Mar 19th expiration is the one we are looking for. When we put that in we get.
We can see that there is still an unusual amount of volume in the $20 strike which has 2,500 volume. We can also see that for some of the options no one has even traded them such as the ones around the surrounding strike of $20.
Now we will set the “as of” to Feb 10th so we can see the large amount of volume.
Set it to Feb 10th, and then we can see the volume for that day.
And we can see that there is around 276,000 options in volume.
