Goldman recommends buying Tesla call options before two big catalysts in October
October promises to be a busy news month for Tesla , and that makes the electric vehicle stock a strong candidate for an options trade, according to Goldman Sachs. Tesla is slated to report its third-quarter delivery numbers next week, followed by a long awaited robotaxi event on Oct. 10. John Marshall of Goldman’s derivatives research team said in a note to clients that both could be stock movers. “Goldman Sachs Automobiles analyst Mark Delaney expects the company’s technology and business outlook for Full Self Driving (FSD)/Robotaxis to be a prominent part of the event. On 2-Oct the company is also expected to report 3Q24 deliveries and production data which Mark estimates to come in-line with Visible Alpha consensus at ~460k,” the note said. The robotaxi event could include details about an expected start date for the service, as well as updates about other parts of Tesla’s business, according to Goldman. In July, shares of Tesla fell 8% after a report from Bloomberg News that the event was being delayed to October from August. To take advantage of the robotaxi event and the deliveries update, Marshall highlighted the Oct. 24 expiry call options on Tesla at a $255 strike price. TSLA 5D mountain Shares of Tesla closed less than $1 below Goldman’s suggest strike price on Tuesday. A call option serves as a bet that a stock will rise above a strike price before expiration, allowing the option holder to buy the stock at a discount to the market price. Shares of Tesla closed at $254.27 per share on Tuesday, so the stock only needs a small rally for the option to be “in the money.” To make a profit on an options trade, the discount between the strike price and the market price must be greater than the premium paid to purchase the option. Currently, Tesla options seem cheap relative to their history, according to Goldman. “TSLA one-month implied volatility of 67 is below levels seen ahead of the July 2024 earnings and given the significance of the upcoming event we see potential for an uptick in volatility,” the note said. Options traders risk losing the premium paid for the contract if the stock fails to rise above the strike price. Shares of Tesla are up less than 3% year to date, underperforming the broader stock market.
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