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Tesla Ranks High On Goldman’s Overwrite List

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Tesla Motors Inc (NASDAQ:TSLA) ranks second on Goldman Sachs’ list of potential overwriting candidates. In a research note dated March 29, 2014, analysts John Marshall and Katherine Fogertey note that equities in general have underperformed credit by 2.5% in the last three weeks. They said this has cut in half the amount of dislocation which occurred over the five weeks before that. The Goldman team sees overwriting as being “more attractive than normal in the near-term” because of their analysis across assets.

Tesla Motors Inc (NASDAQ:TSLA) topped Goldman’s overwriting list at least three times late last year.

Tesla recommended for April expiration overwrite

The analysts have included Tesla Motors Inc (NASDAQ:TSLA) in their list of the top best overwriting ideas for April expiration. They based their analysis on “larger-cap stocks that have high implied volatility but are not reporting earnings in the month.” They say these estimates have added over 500 basis points each year between 1996 and 2011.

Here’s a look at their top six overwriting ideas this week.

Tesla Short Term Overwriting candidates

As you can see, Tesla Motors Inc (NASDAQ:TSLA) is second on their list with an estimated yield of 2.3. The only stock which ranks more highly on their list is Sprint Corporation (NYSE:S).

Why Tesla is identified as a top overwriting candidate

For short term overwriting candidates like Tesla Motors Inc (NASDAQ:TSLA), the Goldman Sachs team focuses on events, market capitalization and implied volatility. The analysts said the stocks in their one-month short-term overwriting list are not reporting earnings before the next expiration and have a market cap in the top two-thirds “of the universe.” They said the stocks also have an implied volatility that is in the top two-thirds.

Tesla Motors Inc (NASDAQ:TSLA) next reports its earnings on May 5. As of the time of the report, the strike percentage was 109, and the premium was $4.80. The analysts say the pricing listed in their report is as of the end of the trading day on March 27.

Facebook also ranks highly

Facebook Inc (NASDAQ:FB) is included on Goldman’s list as well, and not just for short-term overwriting. The analysts have also included it on their three-month Buy-write screen, where it ranks in second place. To come up with the longer term overwriting candidates, the analysts used their colleagues’ price targets in which “calls appear overpriced relative to their analysts’ estimate of where shares are likely to trade.”


The social network also tops their six-month Buy-write screen.


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