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Traders are ‘nervous’ for Tesla’s earnings

Traders are betting on a big swing for Tesla Motors this week, which is set to release its quarterly earnings Wednesday after the bell.

Based on options volume from Tuesday, one trader said that heightened volatility indicates some concern over what Tesla will report.

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"It seems like options traders are a little worried here. It's obviously a very controversial name," Dan Nathan of RiskReversal.com said Tuesday on CNBC's "Fast Money." "There's a lot they could disappoint on."

Tesla's shares have jumped about 20 percent this year. Nathan said as the stock consolidates around the $260 level, the chart could be signaling an approaching downturn.

"This flag is a bit precarious from a purely technical standpoint, especially given that massive run," Nathan said.

Read MoreOp-ed: Tesla Model X: A design flop?

Tesla S automobiles
Reuters
Tesla S automobiles

He said the implied move for Tesla is about 8 percent in either direction, compared with an average move of 4 percent over the last four quarters. The majority of trades were call options that expire on Friday, he said. Call options traded were 1.5 times put options, which indicated more overall bullish bets than bearish.

The majority of analysts remain bullish on Tesla, with an average price target of $279.78. Wednesday morning, it was trading at $266.46.

But Tim Seymour of Triogem Asset Management said Tuesday on CNBC's "Fast Money" that Tesla's climb over the year is mostly attributable to expected future profits from electric vehicles, and the stock will likely go back down to $220.

"I do think the EV is a major opportunity for these guys, but it's in the stock," Seymour said. "That, to me, is where the Street was able to take the stock up 20 to 30 percent. I think you trade right back down on that."

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    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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