Tesla Bulls Pour Millions of Dollars in Options Ahead of Quarterly Results: Options Chatter
$Tesla (TSLA.US)$ bulls are keeping their faith in the electric vehicle giant Tuesday as investors await news on the electric vehicle maker’s progress in scaling its robotaxi offering when it releases financial results after the market closes on Wednesday.
The bulls are hopeful that any favorable development in the rollout of robotaxi and the company’s full self-driving capabilities could overshadow what analysts expect could be Tesla’s second straight quarterly decline in revenue.
At 12:16:55 p.m. in New York Tuesday, a block trade was posted with the active buyer paying an $8.97 million premium for call options that give their holder the right to buy 200,000 Tesla shares at $340 each by Dec. 19. That’s the second biggest block trade posted among stock options so far, behind Microsoft's $14.87 million bullish call options transaction.
Wedbush analysts are counting on the progress in Tesla’s initiatives on artificial intelligence, including its Optimus robot project to turn the EV maker into the future leader in robotics. The company is at a “positive crossroads,” with Elon Musk now acting more like a “war time” CEO, MT Newswires quoted Wedbush analysts as saying.
They estimate the company’s autonomous driving initiative alone could be worth $1 trillion to Tesla’s valuation.
CFRA analyst Garrett Nelson said Tesla’s valuation premium over its peers in the auto industry is justified given its technologies that are currently in development, including a ride-hailing app, a humanoid robot, AI computing and full self-driving vehicles.
But after the stock's 32% rally over the past year to $333.15, Tesla is now trading above Nelson’s 12-month price target of $320, a valuation that is based on the assumption that the stock is worth 110X estimated earnings for 2026. That is based on the expectation that Tesla’s vehicle sales will rise 24% next year, after an expected 10% decline this year, he said in a note to clients dated July 19.
The options market is pricing in a 7% move in Tesla shares the day after the results are released. That’s a smaller change than the 10.6% priced in a day before the company reported its first quarter earnings.
Analysts, on average, expect the company to report an 11% decline in revenue to $22.87 billion in the three months ended June 30, from a year earlier, according to estimates compiled by Bloomberg. The decline is anticipated to worsen from a 9.2% reported in the first quarter.
Adjusted earnings are expected to drop to 44 cents a share in the second quarter, from 52 cents a year earlier, according to Wall Street consensus.
Wedbush is seeing signs of recovery in Tesla shares, with deliveries in China rising in June for the first time in eight months, MT Newswires quoted the analysts as saying.
Share your thoughts on Tesla in the comments section. Is the outlook for robotaxi enough to drown out the negative sentiment resulting from weakening EV sales? Let your voice be heard by voting below. And if you want to read more options columns like this one on TSMC, or this one on Alphabet, follow me here.
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Luzi Ann Santos
Moomoo Senior News and Community Manager
Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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CCRider :
TestLa Kopi : Sustain is a wrong word
70628772 : everytime when I see bulky orders on call options to Tesla, I feel Tesla will fall....
big bag2 70628772 : Are there not many Options in every Earnings Report? You must be referring to Tesla, right?
Talented Mr Ripley : otm call options go itm today prior to post market earnings release.
Smart Investor 1 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
70628772 big bag2 : Do you want to check if Tesla is currently rising or falling? This is a typical situation where the hype is built up before the Earnings Reports, luring a lot of call options, and then the Earnings Reports turn out to be disappointing.
big bag2 : I have practiced. Sorry
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