A surge in traders betting on Tesla has led record gains in the options market.
Single stock options volumes surged 77% in the past six weeks to a new all-time high, according to a Wednesday report from Goldman Sachs. At the forefront of the gains is Tesla, which has the highest average daily traded value in February with nearly $80 billion poured into contracts traded so far.
That’s an 829% increase in the volume of Tesla options compared with notional value over the last 12 months. It comes amid a trading mania that saw the stock surge as much as 112% through February 4, when Tesla closed at an all-time high of $887.06 per share.
“Call buying has dominated this rise in activity, pushing call-skew on single stocks to 1-year highs,” wrote Vishal Vivek and John Marshall in the Wednesday note.
Call options give buyers the right to buy an asset such as Tesla stock at a specified price within a specific time period. If the stock or other underlying asset increases in price, the holder of the call option gains. Call-skew refers to the difference in implied volatility for option contracts for the same underlying asset at different strike prices.
Investors trading Tesla options have reported massive gains trading options during the stock’s torrid rally. In one day of the automaker’s parabolic rise, the value of Tesla shares traded was 1,446% higher than the stock’s daily average trading volume. At the peak of the surge, there were 1.8 Tesla calls traded for every S&P 500 call, the biggest gap on record, according to Bloomberg.
Tesla has gained about 87% year-to-date through Tuesday’s close.
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