Tesla (TSLA) caught a little bid this week, with shares climbing to around $290. The bulls are loving it, as always. But here’s what’s interesting: The options market isn’t showing much excitement.
I checked Tesla’s calls, thinking maybe we could squeeze out a quick trade. After all, a decent move in the stock should translate into decent movement in the options, right?
Well, apparently not…
The calls for May barely moved at all — up just 3%. That’s essentially nothing. For a stock like Tesla, you’d typically expect bigger pops in options premiums when the shares move higher.
It’s Tesla, after all.
Why Tesla’s Calls Are Stuck in Neutral
Here’s what’s happening…
Tesla’s implied move for the week was sitting at only about $11, which, for this notoriously volatile stock, is pretty tame. Volatility expectations have shrunk so much that even a noticeable uptick in the stock price isn’t budging options premiums.
Basically, the options market is yawning at this bounce.
People often toss around terms like “overbought” and “oversold” — but let’s get real. Those are made-up concepts. They sound fancy but don’t really mean much in practice, especially not for trading short-term moves.
The options market doesn’t care if Tesla feels overbought — it cares about implied volatility and expected movement.
Bottom line, this week’s minor bullish price action wasn’t enough to kick implied volatility into gear. The market is telling us it’s expecting smaller swings right now, and that’s exactly why these call options haven’t budged.
Unless Tesla starts making much bigger moves — like it’s doing today, up about 4.1% at 1 p.m. ET — its options are going to stay parked in neutral.
Order Flow:
This is for informational and educational purposes only. These are not official alerts issued by Lance, but rather some interesting orders picked by the team at Lance Ippolito Trading.
When you look at these plays, always take the market maker move into consideration.
You can be right on the direction but still lose money if the stock doesn’t move enough. That’s where the market maker move comes in clutch.
With puts, they’re often downside hedges in case a stock tanks, especially around earnings. The further out of the money they are, the more likely they are to be hedges.
Also be sure and check when the company’s earnings date is because many of the plays we post here are centered around earnings!
And finally, always remember the golden rule when it comes to buying calls: Buy dips, sell rips — and don’t chase!
If a stock’s moved a ton already today, maybe wait for a pullback.
There is inherent risk in trading. Trade at your own risk.
Note: If no date is listed after the month, it’s the monthly expiration (third Friday).
The team at Lance Ippolito Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. This Setup Handed Lance a 96% Win Rate in a Terrible Market
About $11 trillion has been lost over the last 10 weeks…
Yet I was able to nail a96% win rate on a daily setup for 4PM Payouts.
Let me show you how it’s done!
