LONDON (Reuters) – Tesla <TSLA.O> shares edged up on Thursday in U.S. premarket trade, extending a recovery from this week’s drop, but analysts see a bumpy ride ahead as an extreme build-up in derivative positions caps the stock and precludes a full rebound.
The electric-car maker’s shares were up roughly 2% at $373.50 in premarket trading, set for the second straight day of gains to follow the previous session’s 11% rally.
Tesla shares shed 21% on Tuesday – their biggest one-day percentage drop on record – after the stock’s surprise exclusion from the S&P 500 <.SPX>.
The selloff early this week wiped out $75 billion dollars off the company’s market value, exacerbated by the hedges built around massive betting on Tesla options by retail and institutional traders during the stock’s four-fold rise since March.
“All the excess buying in call options suddenly hit a critical mass and you had this