Tesla (NAS100: TSLA) has been the subject of very strong call option flows, suggesting that traders see big upside from here.
TSLA – Daily Chart
TSLA shares are trading at $458.91 after a strong recovery from the lows of March/April. The market appears poised to reach the highs at $488.72 soon, and that will be the key test.
Large call buying has been occurring over the past week, but several tranches of heavily out-of-the-money call options were traded on Wednesday. The price of Tesla shares would have to double for the trades to profit.
More than 18,000 calls have traded at the $880 call option strike contract expiring on March 20, 2026. Another 18K calls at the $870 call option contract have traded for the same expiration date. These are selective bets by a small number of traders, but there has also been a resurgence in short-term call buying.
Investors have been piling into Tesla again after Elon Musk’s commitment to the company. They believe that he can transform it from a car manufacturer into a tech powerhouse that delivers robots and self-driving cars. Meanwhile, the company’s flagging sales have continued to hurt profitability.
“Tesla trades at an eye-watering multiple, its earnings are shrinking amid softening EV demand and cutthroat competition, and EV credits are about to expire, further dampening sales,” said Irene Tunkel, equity strategist at BCA Research.
Tuesday was also the last day car buyers could access tax credits for EV purchases, as the Trump administration had eliminated the incentives. That could show up in a Q3 sales boost next month.