The Options market is a fairly decent indicator to gauge market sentiment. As of now, options traders are betting on the long side of Tesla stock.
Bullish bets on Tesla has increased in the August 10 Weekly option market. Traders have piled on August 10 weekly 380 calls, followed by 370 and 385 calls.
You can check Tesla Option Chain here: Marketwatch
As you can see from the table above, the weekly 380 calls captured most of the action. Which means Options traders are betting Tesla stock price to stay above $380 this week.
According to CNBC contributor Mike Khouw, “Tesla traded more than two times its average daily options volume.”
He added, ” When you think there is going to be a deal, the longer dated option premiums will drop, because the volatility of the stock that is private is zero. And we did actually see, three months and extended, volatility drop a little bit. So, the options market is suggesting that there is some chance that Elon Musk is going to do something here.”
But the current overload of Tesla news and the high level of volatility does make Tesla an ideal play for option traders and day traders.
“Tesla’s volatility makes it more of a trading stock than a value play,” said Ihor Dusaniwsky, head of research at S3 in New York. “Both longs and shorts are susceptible to wild price moves which can easily swing a trader’s book from profit to loss in a single day, which may be the reason they are in the name in the first place,” he said.