Tesla stock exceeds market cap by $ 1 trillion, traders bet on more gains
It’s a milestone Monday for Tesla.
The automaker broke $ 1,000 a share for the first time and entered the $ 1,000 billion club, the handful of stocks like Apple and Microsoft with market caps above that threshold.
The share rose nearly 13% after car rental company Hertz announced it would purchase 100,000 models to bolster its fleet of electric vehicles, an order that will be fully executed by the end of 2022.
“It’s one of those typical tickers that typically trades around a key psychological value, and in the options market it tends to stay at those levels,” Danielle Shay, director of options at Simpler Trading, at CNBC’s “Trading Nation”.
After Tesla’s latest milestone, Shay is aiming for an even higher level.
“I would look at a price of $ 1,200. We’re in that range for a series expiration in November, and I like to trade it with [butterfly spreads]. They’re cheap, low risk, high reward, and they make for very good trades, “she said.
Shay suggests trading a longer term butterfly spread for Tesla – for example, buying the call at 1,050, selling the call at 1,200 and buying a second call at 1,350, expiring in November or November. December.
“The reason I would even say December is because I love the Santa Rally effect plus January and the gains in January,” she said in a follow-up email to CNBC. “January has been my best month of the year for many years in a row. It just seems like a perfect storm, so I took more risks in December / January.”
A move to $ 1,200 implies about 17% more upside from Tesla’s close on Monday. It was trading near $ 1,025 at the end of the session.
Ari Wald, head of technical analysis at Oppenheimer, is also bullish on Tesla and agrees with Shay on a goal of $ 1,200. Wald had previously called this a buy on October 4 – he closed this session just above $ 781.
“If there is any investment advice, the best we give our clients is let your winners run, and that’s a winner,” Wald said in the same interview. “If you look at the stock, the recent strength we see in the chart is a move above its January peak, and we believe this breakout marks the resumption of Tesla’s longer-term uptrend.”
“That break point at $ 900 is now support and steps to $ 1,200 ahead. We like it higher,” he said.
Tesla shares have risen 45% this year.