To The Moon

Let's start with $Tesla (TSLA)$ today.

After last Friday's selloff, with markets now pricing in recession risks and the pullback likely incomplete, some institutions couldn't wait to buy upside calls:

Buying $TSLA 20241220 240.0 CALL$  - 20,000 contracts, expiring Dec 20th for $40.7 million in premium.

Another notable flow was a roll from November calls up to the December expiry:

Buying $TSLA 20241220 225.0 CALL$  - 40,000 contracts for $95.8 million in premium paid.

It seems Friday's vicious selloff spooked some institutions holding bullish call exposure over the next few months, prompting them to roll that upside positioning out another month.

For those experienced with long-dated options, an extra month of duration doesn't mean much. So why insist on that marginal extension?

The focus appears to be year-end, implying strong conviction that $TSLA absolutely must rally back above $240 before January, even if it fails to get there by November expiration.

In my view, $240 is not the question for Tesla this year - it's whether it can reclaim $300+. But kudos to institutions for reinforcing that upside confidence.

With indices yet to complete this pullback, funds aggressively accumulating Tesla calls suggests an opportunity to sell put premium with confidence in the near-term. I'll look at the $TSLA 20240913 200.0 PUT$  for a potential overwrite this week.

Of course, a reminder to avoid buying naked calls which can bleed premium relentlessly.

And what if Tesla's 2023 highs only extend to $240 by year-end? Buying those $TSLA 20241220 225.0 CALLs$ would be a straight loss.

So stick to stock or sell put strategies to define risk.

$Apple (AAPL)$

The new product launch is being dubbed the "pullback event" based on monthly option open interest, with Apple likely rangebound $205-220 over the next two weeks. Selling the $AAPL 20240913 200.0 PUT$  for an overwrite.

$Nvidia (NVDA)$

Tesla wasn't the only name seeing aggressive call buying on Friday's dip. $NVDA$'s $20241220 110.0 CALL$ had a $200+ million buyer hit the tape, acquiring over 24,000 new contracts as open interest rose by 23,300.

Put overwriting dominated the selling flows.

I initiated the $NVDA 20240913 118.0 CALL$  / $90.0 PUT$ overwrite last week which should have room to work given the technical backdrop.

While tech remains relatively strong, index option volumes show institutions hedging for potential downside, commonly employing collar strategies to protect long exposure - e.g. buying $SPY 20240930 508.0 PUT$  and selling $SPY 20240930 561.0 CALL$  overwrite.

$China Internet ETF (KWEB)$

An example where aggressive call buying to front-run a bottom has been walked back:

On Friday, $KWEB 20250321 30.0 CALL$  traded 529,000 contracts, closing out 277,000 of those positions - likely the unwind of that August 19th call buying we had flagged.