$TSLA bulls drive off with fast gains

Shares of Tesla (TSLA) continued their move higher today after the stock split, delivering significant gains in mere hours to upside option positions.

Just this morning, Market Rebellion’s Unusual Activity scanners showed that 8,100 Weekly $500 calls expiring this Friday, Sep. 4, were purchased for $7.60 to $8.50 with shares at $451.44. These were clearly new positions, as there was no open interest in that contract before the trade occurred.

Those calls traded for as much as $22.80 today, at least 2.5 times their purchase prices. The stock surged 10.63% in the same time period, a huge move but still nowhere near that of its options on a relative basis.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

TSLA ended the day at $498.32, up 12.57% for the day. The electric car maker’s stock split going into the opening bell today, and Argus raised its price target on the shares to $566 from $378.