Investors just can’t get enough of Tesla’s stock, it seems.
Around three million stock-option trades take place on an average day, and Tesla accounts for around 7 percent of all options on an average trading day, according to data from Cboe Global Markets, reports The Wall Street Journal.
A stock option is a contract that gives the holder the right, but not the obligation, to buy or sell a specific quantity of a stock at a specific price (strike price) within a specific period of time. There are two types of stock options: call options and put options. A call option gives the holder the right to buy the underlying stock at the strike price, while a put option gives the holder the right to sell the underlying stock at the strike price. Stock options can be traded on various exchanges, such as the Chicago Board Options Exchange (CBOE; owned by Cboe Global Markets) and the American Stock Exchange (AMEX).
Around 5.2 million contracts traded on January 6, representing almost 10 percent of all options and marking the busiest day on record. Tesla’s shares have dropped by 61 percent since its late 2021 peak of $1.2 trillion, before the Federal Reserve began raising interest rates.
Tesla Q4 2022 Earnings Call Transcript: Demand at All-Time High Says Musk https://t.co/NiLozUEga0
— TeslaNorth.com (@RealTeslaNorth) January 27, 2023
Since the beginning of 2022, traders have paid around $700 billion in options related to Tesla, representing more than any other stock or exchange-traded fund.
Interactive Brokers Group Chief Strategist Steve Sosnick likened Tesla traders to religious supporters, saying that shareholders are “almost evangelical in their belief in Tesla, its technology, and to a certain extent, Elon Musk,” Sosnick said. “Tesla is unique—it attracts so many speculators because of its cultlike following.”
“Tesla is perpetually the most active single-stock option at our firm,” Sosnick added.
At Tesla’s fourth-quarter 2022 earnings call this week, CEO Elon Musk stated that demand for the automaker’s vehicles was at an all-time high as of this month.
As of writing, shares of Tesla are surging again, up 8.67% and trading at $174.16 per share, up 28% in the past five days and 59.5% in the past month. In the past year, Tesla shares are down 37%.
