As first reported by Benzinga, an options trader made an interesting bullish bet on TSLA option contracts expiring on Feb 16th. The entity bought 900 contracts (each contract controls 100 stock shares) at a price of $7.10/share.
The options purchase is notable for several reasons.
First, the Feb $362.50 call option is a thinly traded option with only 235 contracts sold until today. In other words, this one purchase of 900 contracts is more than 3x the total amount of contracts sold to this date for that price.
Second, the amount of 900 contracts in a single purchase is also notable. At $7.10, the options trader spent roughly $639,000 on the purchase.
Third, the call options purchase were for options that are “out-of-the-money”, meaning that if TSLA stock is less than $362.50 at date of expiration (Feb 16), then the call options would be worth nothing.
Overall, this is a bullish bet that TSLA will rise at least to over $370 by Feb 16.
TSLA investor and TMC member, Curt Renz, explained:
It was reported as a single trade for 900 contracts, therefore there would have been single entities on each side of the trade at the single price of $7.10. It could have been a naked write, but more likely the writer was a market maker who simultaneously bought some TSLA shares or calls as a hedge.
Sometimes it’s difficult to read too much into option purchases such as this one since they can be part of a more complex transaction. Nevertheless, it’s going to be interesting to see what happens on Feb 7th (Tesla announces Feb 7 as Q4 earnings results date, here’s what to expect) with Tesla’s Q4 earnings.
TSLA stock has been in a 9.5 month period of consolidation, starting from April 10, 2017 until now. The low during this period has been $295.30 and the high $386.99. If you take $345 as the stock price average during this period, then TSLA has fluctuated in a rather tight range of +/- 15% for close to 10 months.