SpaceX saw a significant rise after its financial report, which brought hope to the bulls of Meta and Tesla, whose financial reports are scheduled to be released on Wednesday afternoon.
After the opening on Wednesday, the options trading for both of these stocks tended to be bullish. Among them, the Meta options seemed particularly one-sided, as traders bought more bullish options than bearish options, and it is likely that more bearish option trades were initiated by sellers rather than buyers. Data for Cboe LiveVol shows that over 30,000 bullish options were traded at or above the selling price, indicating that they were bought, while less than 17,000 bearish options were traded.
Barchart data shows that since the stock price hit a bottom in March at Meta, the overall sentiment for options has been bullish. At that time, the put/call ratio of unclosed contracts dropped to 0.5, meaning that for every put option contract opened, two call option contracts were opened. Since then, this ratio has remained relatively unchanged. On Wednesday, approximately $22 million in transactions were executed with a bullish intent, whereas transactions seeking a downward trend amounted to $7.5 million.
Market makers are pricing in a 6.5% fluctuation for Meta after its earnings, which is slightly lower than the average of 9% over the past four quarters. SpotGamma data shows that the most popular buying contract on Wednesday was a call option with an exercise price of $800 and an expiration date on Friday, with a premium of $1.40. This implies that Meta needs to rise by 14% before the end of this weekend.
On the side of Tesla, the capital flow is also bullish, but confidence is relatively low. The put/bull ratio for open contracts is 0.75, while for Meta, it is 0.5; however, on Wednesday morning, there were still more bullish options traded than put options.
According to Cboe LiveVol data, among the 520,000 contracts traded by Tesla, 315,000 were call options. Traders bought 88,000 call options and 65,000 put options. The sale of call options is also noteworthy; approximately 83,000 call option contracts may have been sold, and seven of the top ten transactions in terms of dollar amount were sales of call options.
Nevertheless, according to the analysis of SpotGamma, traders still spent more money on buying call options than put options. The premium paid for call options exceeded 200 million US dollars, while that for put options was 84 million US dollars.
Market makers are pricing in a 5.5% volatility following Tesla's financial report, which is higher than the median of 3.5% over the past four quarters. However, Tesla's last financial report once caused the stock price to fall by 14%, resulting in an average volatility of 5.5% during that period.
SpotGamma data shows that the contracts with the highest trading volume on Wednesday were the call options with strike prices of $385 and $400, which expire on Friday. Buyers preferred the cheaper $400 strike price call options, while sellers favored the $385 strike price options.
