Tesla Options Signal Positioning for Stock's Upward Potential Ahead of EV Maker's Earnings

Luzi Ann Santos joined discussion · Jul 22, 2024 23:58

$Tesla (TSLA.US)$s options market are seeing heavy positioning in call options that give the holders the right to buy the stock at as high as $300 by the end of this week.

That implies higher volatility for a stock that gained 4.9% to $250.95 at 1:44 p.m. Monday in New York, about a day before the electric vehicle is due to report its second quarter earnings. Its chief executive, Elon Musk, said in a social media post that the company could see high production of humanoid robots for other companies in about two years.

Source: Musk on X

Over the past month, shares climbed 37%, after trailing their Magnificent Seven peers since the start of the year. The stock is facing higher volatility as investors, traders and speculators position ahead of Tuesday's financial results. Tesla is expected to report second quarter earnings of about 48 cents a share on revenue of $24.7 billion, according to the average estimate of analysts polled by Capital IQ.

As of early afternoon in New York Monday, almost 800,000 Tesla options changed hands, landing the company in the second slot among the most heavily traded stock options, behind $NVIDIA (NVDA.US)$. (To see the options ranking, click here.)

Call options that give the holders the right to buy Tesla at $300 have 25,620 outstanding contracts, the second biggest open interest among options expiring in four days that are tied to the EV maker.

Tesla Options Signal Positioning for Stock's Upward Potential Ahead of EV Maker's Earnings

The biggest open interest is in $265 calls, with 41,750 outstanding contracts. A block trade of 30,790 of those calls was posted on Friday, almost three-quarters of the total open interest.

An active seller stands to collect a premium of $12.34 million for writing those call options, according to data compiled by moomoo.

Share your thoughts on Tesla's prospects below.

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