Tesla Call Traders Target Deep Out-of-the-Money Strikes

Tesla calls have been popular in recent days

by Josh Selway

Published on Nov 8, 2019 at 2:26 PM
Updated on Jun 24, 2020 at 10:16 AM

Looking through today's options data, Trade-Alert called out a couple trades in Tesla Inc (NASDAQ:TSLA) this morning that grabbed our attention. Specifically, it looks as though a traders spent roughly $1 million combined buying the June 500 and January 2022 600-strike calls. With TSLA last seen at $335.36, it would need to rally 49% to top $500, and almost 80% to get to $600.

This call activity comes as options indicators are already showing a strong bullish bias in the options pits. Tesla's 10-day call/put volume ratio of 1.46 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 100th annual percentile, with the December 300, 360, and 420 calls all seeing notable increases in open interest during this time frame.

TSLA shares have actually run into overbought territory following their October bull gap, with their 14-day Relative Strength Index (RSI) coming in at 79. To look at it another way, Tesla is trading roughly 40 points above its 20-day moving average.

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