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Tesla is having its worst month ever, and some traders expect shares to crash another 20%

Options traders are pumping the brakes on Tesla
Options traders are pumping the brakes on Tesla

Tesla is on track for its worst month ever and some traders expect a bigger crash.

Shares of the electric car maker are down more than 30 percent from its September high of $389.61. According to "Options Action" trader Mike Khouw, that sent off a frenzy of bearish activity in Tesla.

On Wednesday, put options were trading more than three times the average daily volume. He noted that a number of traders bought a block of the June 200 puts for an average price of $10 per contract. These are bearish bets that shares of Tesla will trade below $190 by June.

"There could be a lot more pain to come," Khouw said Wednesday on CNBC's "Fast Money." " [That's] a decline of over 20 percent that would be in about the next three months."

If the trade comes to fruition Tesla could see a loss another $10 billion in market value. Khouw noted that Tesla's lack of available cash flow or substantial earnings makes the decline an "easy move" from here.

Wednesday's drop in the stock came after Moody's slashed Tesla's credit rating from B3 to B2. The report at one point sent Tesla bonds to an all-time low of 86 cents on the dollar. Moody's cited ongoing production issues along with the company's need to accumulate more cash for the downgrade.

"Every time the company has done a capital raise [shares have] rallied off the back of that," CNBC "Fast Money" trader Guy Adami said Wednesday, "[But] the environment feels much different now."

Adami has been bullish on Tesla but cautioned that the stock's recent breakdown through its $280 support could hit a new key level "probably in the $215 to $220s."

Shares of Tesla were up 2.5 percent Thursday afternoon but were down 15.2 percent this year.