Tesla 0DTE Becomes Scalpers’ Battleground as Traders Pile Onto $350 Calls: Options Chatter

$Tesla (TSLA.US)$ turned into a scalpers’ market Friday, as traders of zero-days-to-expiration traders piled onto $350 call options, hopeful for a slight breakout, while skeptics kept selling, and others sought downside protection.

Call options that give their holder the right to buy Tesla shares at $350 each by the end of the day attracted the second heaviest volume, with about 215,600 contracts changing hands, almost 14X the open interest. The price of those call options climbed to as high as $3.35 as the stock price momentarily climbed slightly above that strike price, before time decay quickly wiped out those gains.

(To see Tesla's options chain, click here. For the unusual option trades, click here.)

(ICYMI, read Meta Shares Climb 8%, Boosting 0DTE Call Options' Appeal After Launching New AI Model: Options Chatter)

That battleground became the center of attention with just hours left before the expiration of those 0DTE options. Yesterday, Reuters reported that the electric vehicle giant is designing a new compact, lower-cost SUV that could be built to drive itself from day one.

That could help offset the impact from rising aluminum prices that was fueled by the disruptions to commodity supplies as a result of the war in Iran. Bloomberg Intelligence estimated that the armed conflict could add as much as $385 per vehicle to aluminum-related cost pressure.

Tesla, along with rival EV makers $Rivian Automotive (RIVN.US)$ and $Lucid Group (LCID.US)$ “face greater risk,” given that battery electric vehicles use as much as 400 kilograms or 882 pounds of aluminum per vehicle, Bloomberg Intelligence analyst Eric Varghese wrote in a note Friday.

By 12:25 p.m., those $350 0DTE call options were priced at 15 cents per share, making them an instant lottery ticket that could have delivered unlimited maximum profit potential, had the the stock climb above the breakeven level of $350.155 before they expired hours later. Since it didn't, and the stock stayed below that breakeven, expiring worthless, the buyers who failed to exit the position before the contract lost all its value may have been faced with a maximum loss potential of $15.50 per contract. Each option covers 100 Tesla shares.

While Reuters’ report noted that the goal was for Tesla to cut costs with a smaller battery or single motor, it sent a conflicting signal from an electric vehicle giant that previously announced it was shutting Model S/X production to focus on Cybercab/Optimus.

That muddies the direction of the company that just a few days ago delivered disappointing first quarter delivery data. The company said on April 2 that deliveries reached 358,023 vehicles in the first quarter, missing the 372,160 vehicles expected by analysts.

If Tesla had traded above $350 Friday afternoon, the firms that sold those calls would have been forced to buy Tesla stock to protect themselves from further losses. That scenario could have resulted in forced buying that could have further pushed the stock up even faster.

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