Tesla's Options Market Surge: A Bullish Bet on Trump's Victory

Tesla's stock has been on a rollercoaster ride since Donald Trump's election victory, with options market participants driving a significant surge in activity. As the dust settles on the U.S. election, investors are betting big on Tesla's prospects under a Trump administration, pushing the stock and options market to new heights.

Tesla shares soared more than 8% in overnight trading on November 6, reaching a 52-week high on brokerage platform Robinhood. As of midnight EST, Tesla was trading at about $272 per share, according to Robinhood. In late trading on the Nasdaq, shares were up 2.9% at $258.70. This remarkable rally can be attributed to Elon Musk's high-profile support for Trump and the potential regulatory changes that a Trump administration could bring.


Market expectations for regulatory changes have played a significant role in Tesla's stock rally. Trump's hostility towards green energy and electric cars, coupled with Musk's backing, has raised concerns about potential subsidy reductions for Tesla's competitors. This could give Tesla a competitive advantage, as Wedbush analyst Dan Ives noted in a recent report. Additionally, Trump's plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S., further benefiting Tesla.


The surge in Tesla's stock price has been accompanied by a significant increase in options trading volumes and implied volatilities. According to Nasdaq data, options trading volumes for Tesla (TSLA) have increased by 150% since Election Day, reaching a record high of 1.2 million contracts on November 7th. Implied volatilities, which measure the market's expectation of future price movements, have also surged, reaching levels not seen since the COVID-19 market crash in March 2020. This suggests that investors are pricing in significant uncertainty and potential volatility in Tesla's stock price.

While the bullish sentiment is evident, investors should remain cautious. Tesla's high valuation and the uncertainties surrounding its autonomous and Robotaxi ambitions warrant a careful approach. Moreover, the potential regulatory changes under a Trump administration are uncertain and may not materialize as expected. As such, investors should exercise due diligence and maintain a balanced perspective when evaluating Tesla's future prospects.

In conclusion, Tesla's stock rally following Trump's victory has sparked a surge in options trading volumes and implied volatilities, reflecting investor excitement and uncertainty. While the bullish sentiment is understandable, investors should remain cautious and maintain a balanced perspective, given the high valuation and regulatory uncertainties. As always, independent thinking and careful analysis are essential for making informed investment decisions.