Tesla Stock: Should You Follow Wall Street or Cathie Wood? Options Market Reveals All

Tesla Inc TSLA is one stock that always attracts strong contrarian views from major market players under any given environment.

Jefferies analyst Philippe Houchois downgraded the stock from ‘Buy' to ‘Hold' and reduced the price target from $230 to $185. An already unhappy Wall Street appeared to take cues and extended pressure on the stock that led to an over 4% decline by the end of Wednesday's session.

Also Read: Everything You Need To Know About Tesla Stock

But Cathie Wood-led ARK Investment Management loaded up on the EV-maker's stock during the day, having bought over 190,000 shares of the EV-maker at an estimated valuation of over $29 million based on Wednesday's closing price.

So, where is the stock headed? And what is its short-term view? To answer these questions, here's a detailed look at Tesla's options data to find the potential support and resistance levels as factored in by professional traders for the week:

1. Resistance: Options expiring on Friday indicate maximum open interest build-up at the $170 Call strike amongst out-of-the-money Call options. This indicates the level may act as a strong resistance this week. Given that Tesla stock closed Wednesday's session at $153.75, the resistance factored in by the options market is a whopping 10% away. This kind of move isn't impossible for a stock like Tesla which faces frequent bouts of volatility. But the probability seems more skewed to the assumption that the level may not get breached by Friday. Still, the faraway resistance level provides good room for some bounce back.

2 Support: On the downside, maximum open interest accumulation amongst out-of-the-money Put options can be seen at the $150 Put strike. Since this level lies at just over a 2% decline from Wednesday's closing price, the stock may be looking at a limited downside for the rest of the week.

Looking at both levels, it appears the stock has more potential for an upside movement than a further decline. However, it is noteworthy that open interest data only provides a fair idea about support and resistance levels. Any major news or macro event may lead to significant stock price movements and a subsequent shift in open interest levels.

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