Tesla stock needs to hold this critical level after earnings: Trader

Options Action: Tesla shifting gears?

Ahead of automaker Tesla's quarterly earnings, the options market is pricing in a relatively small move, given the stock's turbulent year.

"Fast Money" trader Dan Nathan said Tuesday that the options market is pricing in about a 6 percent move in either direction; this is basically in line with the average fourth-quarter move of about 5.75 percent, Nathan said.

While looking at a one-year chart of Tesla, Nathan noted that the stock has been in a "well-defined downtrend" since April, and said the stock has found support at about $200.

Longer term, he added that the support level holds as far back as 2013.

"This level down here at $200 that it's kind of been holding on here — it really has to hold here," Nathan said Tuesday on CNBC's "Fast Money," because investors are not expecting too much news out of Tesla until updates are released about its upcoming Model 3.

"And they need to see some traction there — that's the future of the company," Nathan said, referring to the anticipated Model 3.

Following a bumpy few months for Tesla, shares of which are down over 15 percent year to date, the automaker posted record vehicle production and delivery numbers earlier this month. Tesla reported that it delivered about 24,500 vehicles, up 70 percent quarter over quarter.

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