Morning Commentary: Tesla convertibles in focus in run up to earnings amid volatility

By Abigail W. Adams

Portland, Me., Oct. 24 – While primary market activity has been slow in the midst of the earnings season blackout, the convertibles secondary space was active on Wednesday with above-average trading volume.

More than $119 million of bonds were on the tape a little over one hour into Wednesday’s session.

Focus was on companies about to release their earnings reports with no quarterly report more talked about or closely followed by the Street than Tesla Inc.

Tesla’s convertible notes were the volume leaders in the secondary space with stock volatile amid speculation about a third-quarter profit.

Tesla’s 1.25% convertible notes due 2021 were changing hands at outright prices of 102.625 with more than $16 million on the tape early in the session, a market source said.

The 2.375% convertible notes due 2022 were trading just shy of 110.5 with more than $13 million of the bonds in play.

While Tesla’s B and C convertible tranches were in focus, the soon-to-mature 0.25% convertible notes due March 1, 2019 were not active, a market source said.

Tesla stock was volatile early Wednesday after a 12% jump on Tuesday brought on by Citron Research founder Andrew Left’s about face on the company’s prospects.

Tesla stock jumped as high as $304.00 soon after the opening bell on Wednesday but quickly came in to trade as low as $285.00.

Left announced on Tuesday he was giving up his short position and going long in Tesla with a profit expected in the third quarter.

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