Millions of Tesla's options contracts have already changed hands this week, and savvy traders are making out like bandits.
The stock is up more than 30% in a week, over 70% in a month and about 235% in the last six months. If you think those numbers are too big to believe, wait until you hear about the electric-auto maker's options contracts.
. That is a head-turning number, made possible by the stock's seemingly unstoppable march higher leading to skyrocketing inflation in the value of certain options contracts.," Khouw said. "Those were way out of the money at the time that we highlighted them. [The trader] spent $19 per contract for those. Those traded over $250 [per contract] today. The buyer of those calls made over $20 million in one week.
"If you're thinking about using options yourself to make directional bets, it's probably going to be very expensive to do that unless you use spreads," said Khouw. "I was looking at a 1,000/1,200-call spread. That would cost about $40 to make that bet [per contract]." On the other hand, this stock could theoretically swing higher again just as easily as it could sell off another 15%. So, limiting your risk on a bearish bet against the stock is important, too.
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