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Tesla’s ‘Cybertruck’ could send the stock back toward all-time highs, options traders say

Tesla shares are soaring, and when the electric automaker unveils its “Cybertruck” on Thursday night in Los Angeles, options traders are betting that the rally will hit even higher speeds.Despite finishing Wednesday’s session in the red, Tesla has surged a whopping 74% in the last six months, breaking into positive territory on the year and…

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Published on November 21, 2019

Tesla shares are soaring, and when the electric automaker unveils its “Cybertruck” on Thursday night in Los Angeles, options traders are betting that the rally will hit even higher speeds.

Despite finishing Wednesday's session in the red, Tesla has surged a whopping 74% in the last six months, breaking into positive territory on the year and closing in on highs not seen since last December.

If the options market is right, the stock will break out above those highs when Tesla unveils its electric pickup truck.

“The options market is implying a move of about 3.7% in Tesla shares between now and the close [on Friday],” Optimize Advisors President Michael Khouw said Wednesday on “Fast Money.” “That's a wider range, actually, than the stock has seen over the last five trading days.”

Most of the options trading traffic in Tesla centered around contracts that would imply a move in the stock to its highest levels since Dec. 17, 2018.

“The most active options were the weekly 360-calls,” said Khouw. “Over 10,500 of those traded for an average price of about $5. Obviously, buyers of those calls are betting that the stock is going to rise above that $360 strike price by at least the $5 that they paid.”

According to Khouw, it's not just the mysterious intrigue of a new product that has options traders salivating. There is a reason why the hype around this particular new vehicle might actually be warranted among options traders and fans of Elon Musk‘s automaker, alike.

“When we think about what could propel Tesla shares higher or lower, light-duty truck sales seem like the one possible area that's obviously the most profitable sector for the U.S. auto industry,” said Khouw.

Tesla shares were up about 2% on Thursday.