Tesla Options Surge Amidst Trump Win Frenzy

Tesla's stock and options have been on a rollercoaster ride since the U.S. presidential election, with a surge in trading activity fueled by optimism around regulatory changes under a Trump administration. As the dust settles, investors are left to ponder the implications for Tesla's future and their own portfolios.

The election of Donald Trump has sparked a wave of euphoria among Tesla investors, with options trading reaching unprecedented levels. On November 10th, open interest in call options reached an all-time high of 1.9 million contracts, up 37% from the previous week. This 'euphoric' trading is largely driven by optimism around regulatory changes under a Trump presidency, which could benefit Tesla's autonomous and AI initiatives.

Wedbush Securities analyst Dan Ives estimates these opportunities could be worth $1 trillion for Tesla, with a Trump win potentially fast-tracking these developments. However, investors should remain cautious, as Tesla's stock is already trading at a distressingly high 88 times trailing earnings and 322 times free cash flow. The company may have only four years to grow before regulations change again, making it crucial for Tesla to justify its high valuation.



Tesla's competitive advantage in the EV market is also a topic of debate among market participants. Wedbush's Dan Ives believes a Trump presidency could give Tesla a clear competitive advantage in a non-EV subsidy environment, coupled with likely higher China tariffs that would push away cheaper Chinese EV players. However, the author maintains a cautious attitude towards Tesla's market prospects, acknowledging its leadership in the EV industry but highlighting concerns over its valuation and growth potential.

The recent stock surge is driven by optimism about its autonomous and Robotaxi ambitions, but uncertainties in these areas and challenges in justifying Tesla's high valuation warrant caution. Analyst price target hikes, such as Wedbush's, play a significant role in fueling the 'euphoric' trading in Tesla options. Wedbush analyst Dan Ives raised his price target on Tesla stock to $400, a 33% increase, following Trump's election win. This hike, along with Ives' prediction that a Trump administration would clear regulatory hurdles for Tesla's AI and autonomous vehicle initiatives, has boosted investor confidence.



In conclusion, the euphoric trading in Tesla options following Trump's election win reflects investors' optimism about the potential regulatory changes under his administration. However, investors should remain cautious, as Tesla's high valuation and growth prospects face uncertainties, particularly in autonomous driving and Robotaxi ambitions. As the market continues to digest the implications of a Trump presidency, investors should exercise due diligence and maintain a critical perspective on Tesla's future.