Tesla (TSLA) is scheduled to report third quarter earnings after the close Tuesday, and murmurs on Wall Street suggest the company will top analyst estimates. The consensus expectation for the report is EPS of $0.11 on revenue of $534.64 million. Shares opened Monday’s session at $165 and rose over $10 to close out the session at $175.20, and have rallied further in pre-market trading to around $180. One of the hottest stocks in 2013, TSLA shares have risen nearly 400 percent year to date, having traded as high as $194.50.
A key indicator on Tesla’s call will be third-quarter vehicle deliveries. For Q2, Tesla delivered 5,150 vehicles. Elon Musk’s auto-manufacturer is currently producing around 500 vehicles per week, or 26,000 per year, and some are calling for 6,000 or more deliveries for Q3. Historically, TSLA has been a big earnings mover, with an average move of 10.5% over the past 8 quarters. The weekly straddle, expiring this Friday, is implying move of 11.7%. Shares have also rallied on 3 of the past 4 reports, and 6 of the past 8.
I want to play TSLA to the long side, so I’m looking to the 185-195 Bull Call Spread.
MY TRADE
Buy the TSLA Nov Weekly 185-195 Bull Call Spread for about $2.85.
Risk: $285 per 1 Lot
Reward: $715 per 1 Lot
Break-even: $187.85
