Tesla Motors Inc (TSLA) Tops Goldman’s Overwriting List

Tesla Motors Inc (NASDAQ:TSLA) snapped a multi-day losing streak on Friday, ending the day with a 4 percent increase in share price. Will the automaker’s stock keep rising today? Goldman Sachs analysts believe October could be a bumpy month for Tesla and several other stocks. They issued a report focusing on their top short-term overwriting candidates, and Tesla Motors Inc (NASDAQ:TSLA) holds a prominent position right at the top of that list.

Tesla Motors Inc (TSLA) Tops Goldman's Overwriting List

What makes Tesla one of their top picks

Analysts John Marshall and Katherine Fogertey identified their top candidates for short-term overwriting using a few metrics. Specifically, these stocks are “large-cap, high implied volatility stocks that do not have earnings events” in the next couple of weeks. They also used the fundamental ratings and price targets of Goldman analysts covering the stocks. In their estimation, “overwriting larger-cap stocks that have high implied volatility but are not reporting earnings in the month added more than 500 basis points annually from 1996 to 2011.”

Tesla Motors Inc (NASDAQ:TSLA)’s next earnings report isn’t until November 4. They record the current strike on the company as 180 with a strike percentage of 104 for an Oct. 13 call. Other big names on their list include Herbalife Ltd (NYSE:HLF), Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), LinkedIn Corp (NYSE:LNKD) and Facebook Inc (NASDAQ:FB). Here’s the chart with their full list of short-term overwriting candidates.

Tesla Goldman Sachs overwriting list

October is historically a volatile month for stocks

The Goldman Sachs analysts note that the S&P 500 has fallen almost 3 percent since it hit highs in the middle of September. They said the S&P average stock 1-month implied volatility has risen about 4 points during the same period to 23, and currently it’s 2 points from 1-year highs. The analysts said although the government shutdown is the primary reason for the increased volatility in the markets, they think October itself is also a reason for investors to be wary.

Over the last 20 years, they said volatility has typically increased in September and October. They report that industrials have seen the biggest rise in implied volatility.