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Tesla Call Options See Explosive Gains As China Unlocks Growth Potential

Tesla (TSLA) - ★★★ - Ranked #58 in Q2 2024 Large Cap Equity Rankings

Tesla's stock soared 15% on Monday, fueling a stunning rally in bullish call options amid renewed optimism over the electric carmaker's growth prospects in China. Certain calls expiring in May 2024 surged as much as 1,000% in a single day's trading as investors piled into bets that Tesla's growth story may have turned a corner.

The catalyst was a crucial regulatory greenlight from Beijing following CEO Elon Musk's whirlwind trip to meet with top Chinese officials. After his 24-hour visit, China signaled its approval for Tesla to roll out its advanced driver-assistance software in the crucial market.

This breakthrough opens up a massive new opportunity for Tesla at a time when concerns over slowing demand have weighed on the stock. Musk has been vying to expand the controversial driver-assistance feature globally as a potential driver of recurring revenue streams.

Musk's meetings in Beijing seem to have paid off, with China giving its blessing for Tesla to deploy the software domestically. This paves the way for wider adoption among Chinese consumers and could reignite growth for Tesla in its second-largest market after the U.S.

The approval sparked a frenzy of trading in Tesla options, with traders aggressively buying call options that would profit from a continued run-up in the stock price. May 2024 calls with a $200 strike price, which were trading for around $0.72 at Friday's close, surged to nearly $8 by today's close - representing potential gains of over 1,000% in a single session.

In January, we presented our subscribers with a bullish medium term outlook on Tesla and provided real time access to our trading diary which focused on upside potential in the name. We have since closed out half of that position with a 40% gain, but we have kept half of our contracts open as we believe there is more potential ahead in the intermediate term.

While a extraordinary one-day move, it underscores the immense volatility around Tesla's stock and the conviction among bulls that this China deal could prove transformative. After a rough start to 2024 amid concerns over demand and competition, Musk's China win has reignited optimism that Tesla's best growth days may still lie ahead.

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The information provided in this report is for general informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The opinions expressed in the report are our own and are subject to change without notice. We may have a position in the securities mentioned in the report, and we may buy or sell such securities without notice. Any investment decisions made based on the information in this report are solely the responsibility of the recipient. We do not accept any liability for any direct, indirect, or consequential loss arising from any use of this report or its contents.


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