Tesla Bulls Load Up on Options Ahead of Robotaxi Event: Options Chatter
$Tesla (TSLA.US)$ bulls are loading up on options Monday, weeks before the electric vehicle giant is widely expected to undertake a limited launch of its robotaxi service in Austin, Texas.
Last month, when the company reported its first quarter results, CEO Elon Musk assured analysts that he and his team are “laser focused on bringing Robotaxi to Austin in June.”
The rollout of the Robotaxi has been delayed a number of times for reasons including safety issues with Tesla’s full-serve driving software, which will allow the vehicles to run autonomously, without needing for a human to take the wheel.
This time around, Morgan Stanley analysts including Adam Jonas who visited Tesla in Palo Alto last week are convinced that the planned rollout is a “go,” though they said the fleet size will likely be between 10 to 20 cars on public roads, and the event will be by invitation only. The analysts have an overweight rating on Tesla and a price target of $410 on the stock, implying upside potential.
Ten of the 19 block trades of Tesla options posted today were bullish, exchange data show. The biggest of those transactions involved an active buyer paying an $206 million premium for call options that give the holder the right to buy 2.641 million Tesla shares by July 18 at $270 each.
Each contract was priced at $78 per share, taking the total cost of buying the stock to $348, excluding fees, should the holder decide to exercise the option before expiration. That could imply the holder’s optimism that the stock price would go up from its closing price of $342.09 on Monday.
“Tesla remains our ‘Top Pick’ in US autos and we believe it is the best expression for the development and commercialization of autonomous robots across a range of modalities from cars to humanoids (and others),” the Morgan Stanley analysts wrote in a note Friday.
That biggest bullish block trade was posted at the same time when a transaction of the same size and expiration date was recorded. In that other trade, the buyer paid an $89 million premium for call options that give the holder the right to buy the Tesla stock at $340 each. Considering the price of $33.50 paid per share for those call options, the holder’s cost of buying Tesla shares will be $373.70, should he or she decide to exercise the option.
At the current share price, Tesla’s stock is trading at 167.3X its estimated 2025 earnings, according to Bloomberg consensus. That’s a higher valuation than $NVIDIA (NVDA.US)$’s 30.88X.
“Nearly 15 years after going public, investors struggle to justify the value of Tesla as much as ever before,” the Morgan Stanley analysts wrote in a separate note to clients Monday. “We expect this valuation ‘problem’ gets worse before it gets better.”
Still, the Morgan Stanley analysts are confident that should Tesla succeed in its rollout for robotaxi, that could help the company to tap into the biggest total addressable market ever.
“If you solve autonomy for cars, you solve autonomy for everything,” they said. “A Humanoid is just one of the thousands of form factors of embodied AI.”
Share your thoughts on Tesla in the comments section. Do you expect the robotaxi to justify Tesla's high valuation or even push the stock price even higher? Let your voice be heard by voting below. And if you want to read more options columns like this one on Microsoft, or this one on UnitedHealth, follow me here.
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Luzi Ann Santos
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Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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TCL : definitely..no doubt.. Stand with TESLA.. human future AI...
Coach Donnie : Thanks!
RomeoMustDie : lets do this thing dont just stand around and talk about it. i need this call
SmokingGun : question is wjo will ride those robotaxis? no one wants to be associated with this brand. these taxis will be vandalized
73241639 : This will change the world as we know it. The future is here and Tesla is the tip of the spear for autonomy. The revolution will be televised!!
TCL SmokingGun : never try never know be positive..
Ultratech : boycott elon no mercy for nazi scum
sincere Hamster_2458 TCL : All vision is destined to fail.
TCL sincere Hamster_2458 : then put your Short all the way... dare you?..or stop talk cock here..see you at June..
MojoRisin SmokingGun : right! he broke the brand. stupid of the genius.
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