By Tesla Inc.’s stock options are generating significant buzz ahead of the company’s second-quarter results announcement. Experts are pricing options using a strategy known as a straddle, indicating a larger-than-usual one-day move for the electric-vehicle manufacturer.
Straddle Strategy
The straddle strategy involves purchasing both bullish (calls) and bearish (puts) options with the same strike prices, which are set at the current market price. Data provided by Matt Amberson from Option Research & Technology Services reveals that the options market is pricing in a $21.56 move in either direction for Tesla’s stock on Thursday.
Impressive Gain Potential
This anticipated move represents a 7.3% shift based on the current stock price of $294.78. Investors employing the straddle strategy will stand to profit if Tesla’s stock closes above $316.34 or below $273.22 on Thursday. It is worth noting that this projected move is 25% higher than the average volatility of $17.29 witnessed over the past 12 quarters, as reported by Amberson.
Tesla’s Remarkable Performance
Prior to the earnings release, Tesla’s stock gained 0.5%, reaching a 10-month high. Over the last three months, it has surged an impressive 63.2%. In comparison, the S&P 500 has only gained 9.9%.
Stay tuned as the market eagerly awaits Tesla’s second-quarter results, which will undoubtedly have a significant impact on its stock performance.
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