Traders strap in to ride Tesla higher


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Tesla Motors popped on an upgrade last week, and now the bulls think it's ready to run.

optionMONSTER's Heat Seeker tracking system detected an explosion of all buying in the maker of electric cars, whose revenue nearly doubled the last time it reported earnings on Feb. 15. Results beat forecasts on both the top and bottom lines.

It received a jolt higher on March 31 when Morgan Stanley upgraded the shares to "overweight" from "equal weight," and predicted they would triple to $70 as customers shift away from internal-combustion engines. TSLA had been consolidating since then, but started moving yesterday and ended the session up 2.83 percent to $27.24.

The April 25 calls were the most active strike, trading 5,920 times against open interest of 1,594 contracts. Premiums on the large blocks fluctuated from $2.20 to $2.55. The April 27s saw volume of almost 2,000, and mostly priced for $0.85 to $1.50.

It's noteworthy that both contracts are in-the-money, letting investors lock in an entry prices in case TSLA runs away over the course of the next week.

TSLA There was also heavy buying in the April 30s for $0.35 and the September 26s for $4.30. By the end of trading, calls outnumbered puts by a bullish 15-to-1 ratio, and total options volume was quadruple the daily average.

TSLA, named after the Serbian-born electrical engineer whose alternating-current system bettered Thomas Edison's direct current, went public for $17 a share last June. It traded over $35 at the end of the year before retreating and finding support around $22 in February and March ahead of the big call by Morgan Stanley, which was one of the three lead banks on its IPO (see chart at right).

(Chart courtesy of tradeMONSTER)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options

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