Tesla Inc.’s slide to the lowest level since May attracted a wave of bullish option buying not in the stock itself, but with an exchange traded fund that offers more leverage.
Investors flocked to a call option in Direxion Daily TSLA Bull 1.5X Shares ETF (ticker TSLL), an exchange-traded fund that seeks to replicate 150% of Tesla’s performance — buying contracts that would benefit from a roughly 45% rally in the automaker by January 2025.
According to Chris Murphy, co-head of derivative strategy at Susquehanna International Group, the trader may have targeted the ETF — as opposed to options tied to Tesla shares — in order to take advantage of the fund’s added leverage.
Tesla shares slumped as much as 6.9% Monday to the lowest level since May after Handelsblatt reported the German IT giant SAP is removing the electric-vehicle maker from the list of its car suppliers. The EV maker has slipped more than 4% over the past year, trailing other megacap companies. By comparison, Meta Platforms is up 147% over the same period.
The option — a Jan. 17 $12.73 call — traded in small blocks throughout the morning, with the ETF trading around $8.50. By 1:12 p.m. in New York, the contract had changed hands 63,000 times — pushing the total call volume to nearly eight times greater than the average over the past month. The 6.3 million shares that represents would be more than one-third of the fund’s 15-day average volume.
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