Goldman recommends buying Tesla call options ahead of two big events in October
October promises to be a busy news month for Tesla, and that makes the electric car stock a prime candidate for options trading, according to Goldman Sachs. Tesla is scheduled to report Q3 delivery numbers next week, followed by its long-awaited robotaxi event on Oct. 10. Both could be a driver for the stock, Goldman’s derivatives research team’s John Marshall said in a note to clients. “Goldman Sachs Automobiles analyst Mark Delaney expects the company’s technology and business outlook for Full Self Driving (FSD)/Robotaxis to be a highlight of the event. The company is also expected to report Q3 2024 production and delivery data on Oct. 2, which Mark estimates will be in line with Visible Alpha’s consensus of ~460K,” the note said. Goldman said the robotaxi event could include details on the expected start date for the service, as well as updates on other parts of Tesla’s business. Tesla shares fell 8% in July after Bloomberg News reported the event would be postponed from August to October. To capitalize on the robotaxi event and delivery update, Marshall highlighted call options on Tesla expiring on October 24 with a strike price of $255. Tesla’s TSLA 5D mountain closed less than $1 below Goldman’s proposed strike price on Tuesday. Call options act as a bet that the stock will rise above the strike price before expiration, allowing the option holder to buy the stock at a discount to the market price. Tesla shares closed at $254.27 a share on Tuesday, so the stock only needs a small rally for the option to be “valuable.” To profit from an options trade, the discount between the strike price and the market price must be greater than the premium paid to buy the option. Tesla options currently look cheap relative to their history, according to Goldman. “TSLA’s one-month implied volatility of 67 is below the level seen ahead of July 2024 earnings, and given the significance of the upcoming event, we see the potential for increased volatility,” the note said. Options traders risk losing the premium they paid for the contract if the stock fails to rise above the strike price. Tesla shares are up less than 3% this year, underperforming the broader stock market.
