Option Bull Throws Down Millions on Tesla Motors, Inc. (TSLA)

A huge long call spread was initiated on Tesla Motors Inc (TSLA)

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Published on Mar 5, 2015 at 10:35 AM
Updated on Apr 20, 2015 at 5:32 PM

Tesla Motors Inc's (NASDAQ:TSLA) recent momentum is carrying over this morning, with the shares up 1.2% at $204.81 -- putting them on pace for their third straight positive session. Amid this uptick, calls are trading at nearly triple the expected intraday rate, with one speculator placing a brow-raising seven-figure bet.

According to Trade-Alert, one option bull initiated a massive long call spread at the June 225 and 250 calls for an initial cash outlay of more than $2.7 million -- $5.45 net debit per pair of contracts * 5,000 contracts * 100 shares per contract -- which represents his maximum potential risk on the transaction. In other words, this trader is rolling the dice on TSLA rallying as high as the round-number $250 mark by June options expiration.

As alluded to, the auto stock has had a strong past couple days. However, TSLA has been trending lower over the long term -- down 19% year-over-year -- and hasn't toppled the quarter-millennium level since late November.

As such, option players have been placing bearish bets over bullish in recent months at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Tesla Motors Inc (NASDAQ:TSLA) boasts a 50-day ISE/CBOE/PHLX put/call volume ratio of 1.01, which ranks higher than four-fifths of all readings from the past year.

Daily Chart of TSLA since November 2014


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