Options traders bet on big post-earnings gains for Tesla

Jessica Thompson

In this article

Options traders are making a ton of noise in Tesla‘s stock as the company gears up to report earnings after the bell Wednesday.

The electric vehicle manufacturer headed up by Elon Musk — who continues to make a lot of noise himself — has struggled so far this year, but the options market is betting that Tesla could be back in positive territory for 2022 by the end of this week.

“[Tesla] was the fourth-busiest [single stock option] in contract terms today and the busiest in notional terms. Right now, the options market is implying a move of about 6% by the end of the week,” Optimize Advisors CIO Michael Khouw said Tuesday on CNBC’s “Fast Money.”

Bullish traders were largely responsible for the flood of trading volume Tesla’s options experienced Tuesday, though the most popular contract targeted a post-earnings move slightly smaller than the 6% predicted by the market as a whole.

“The most active options were the [April 22 weekly] 1,100 and 1,050-strike calls. The 1,050s, for example, saw nearly 30,000 trade at a price of $20 per contract,” said Khouw. “Buyers of those calls are risking a little under 2% of the current stock price to make a bullish bet that the stock is going to be up about 4.3% by the end of the week.”

Tesla was down more than 3% midday Wednesday.


Leave a Reply

Your email address will not be published. Required fields are marked *