Since January 2023, Tesla (TSLA) shareholders have eagerly snapped up the company’s expensive shares, confident in the iconoclastic charisma of Elon Musk and the belief that Tesla’s electric vehicles were the next “big thing.” They’ve continued to buy despite persistently high valuations — the current price-to-earnings (P/E) ratio is 365, and the projected P/E for the next 12 months is 190. That suggests investors still expect remarkable growth from a company that already boasts a $1.5 trillion market cap, the eighth largest in the S & P 500, and is roughly equal in value to all other global automakers combined. TSLA 1Y mountain Tesla, 1-year Option traders shared in the euphoria. They pushed up prices on call options (which give the right to buy TSLA shares) and sold put options (which give the right to sell), betting that Tesla’s rally would continue while dismissing the likelihood of a decline. For most of 2023 through 2025, this led to out-of-the-money calls being more expensive than comparable puts — an unusual dynamic for a mega-cap stock like TSLA. Typically, large-cap names see investors bidding up puts for downside protection or selling covered calls for yield, pushing call prices lower. That story has now flipped. Protective puts on TSLA have grown much more expensive, while bullish calls have lost favor, signaling that traders see greater risk to the downside. To capture this dynamic, we track the ratio of out-of-the-money put prices to out-of-the-money call prices — a metric we call RiskDex, which measures the market’s perception of a stock’s near-term risk over the next 30 days. For Tesla, it just reached its highest level in three years. There are several reasons to think Tesla may face a rougher road ahead. The company plans to retire the adored Model S and shift production toward smaller, lower-margin vehicles. The EV tax credit expired late last year, making all new Teslas pricier for buyers. Some investors are fatigued by Musk’s recurring promises of fully autonomous driving — while Alphabet’s Waymo appears to be pulling ahead in the race. And that once-celebrated P/E ratio, a badge of optimism for devoted shareholders, now seems more like a warning sign. Let’s look more closely at what the options market — and the RiskDex measure — can tell us about Tesla’s changing fortunes. Over the past three years, TSLA’s average RiskDex reading has been 0.999, meaning puts were slightly cheaper than calls. The lowest reading came in July 2024 at 0.59 (put prices were just 59% that of call prices) just after the stock surged 27% in a week on its way to more than doubling by year-end. That low RiskDex reading was a strong bullish indicator. Since then, however, RiskDex has climbed steadily as puts have grown costlier in relation to calls. Last Friday it reached 1.92 — the highest level in three years — and remains elevated at 1.75 as of midday Wednesday, March 25. Option traders clearly believe the implied downside now outweighs the potential upside over the next 30 days. That may be another prescient signal. Tesla’s soaring valuation, shrinking policy support, and softening consumer enthusiasm for EVs are combining with a telling shift in options pricing to create a new narrative. The RiskDex gauge — once a mirror of boundless optimism — now suggests growing caution. For investors, that reversal is more than sentiment; it’s a signal that Tesla’s once-limitless story may finally be colliding with reality.