A big rally in SpaceX after earnings is giving hope to Meta and Tesla bulls ahead of their reports due Wednesday afternoon.
Options trading in both stocks leaned bullish after the open Wednesday, with Meta options looking particularly one-sided as traders bought more calls than puts and more put trades likely initiated by sellers than buyers. More than 30,000 calls traded at or above the ask, suggesting they were bought, versus under 17,000 puts, Cboe LiveVol data shows.
Meta options have generally been bullish since the stock’s March low, when the put/call ratio of open contracts plunged to 0.5, meaning two calls open for every one put contract, and that hasn’t budged much since, Barchart data show. Almost $22 million of trades were done with a bullish intent on Wednesday, compared to $7.5 million looking for downside.
Meta, Tesla in past three months
Market-makers are pricing a 6.5% swing for Meta after earnings, a little under the 9% average the past four quarters. The most popular contract to buy on Wednesday was the 800 strike call expiring Friday that costs $1.40 and needs Meta to rally 14% into the weekend, SpotGamma data shows.
In Tesla, the flows also lean bullish, but with less conviction. The put/call ratio of open contracts is 0.75, compared to Meta’s 0.5, though more calls did trade Wednesday morning than puts.
Of the 520,000 contracts traded in Tesla, 315,000 were calls, as traders bought 88,000 calls and 65,000 puts, according to Cboe LiveVol data. There was also notable call-selling, with 83,000 call contracts likely sold and seven of the top 10 trades by dollar-amount call sales.
Still, traders spent more money buying calls than they did puts, with call-buying premiums amounting to over $200 million, compared to $84 million in puts, according to SpotGamma’s analysis.
Market-makers are pricing a 5.5% swing in Tesla after its report, above the four-quarter median of 3.5%. That said, Tesla’s last report caused a 14% selloff in the stock that makes the average move in that period 5.5%.
The most-heavily traded contracts by volume Wednesday were the 385 and 400-strike calls expiring Friday, with buyers favoring the cheaper 400-strike call and sellers leaning into the 385-strikes, SpotGamms data show.
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