Not everyone is giving up on Elon Musk’s dream of transforming Tesla Inc. into a private company.
Options to buy the automaker’s shares at above his suggested US$420 take-private level were among the most heavily traded on Wednesday -- and they gained in price, even as the stock dipped modestly. The volume on December calls at a US$430 strike jumped by more than 7,000 per cent, making it the fifth-most active put or call on the company’s shares and the only contract in the top 10 for which the price increased.
While the amounts involved are small -- about 3,000 options worth $1.3 million changed hands -- it suggests at least some investors see a chance for Tesla to shake off its recent difficulties. They could also represent hedging trades. After initially surging when Musk tweeted that funding was secured for his daring take-private endeavor, Tesla’s share price has since sagged, showing growing skepticism in the wider market.
On the other side of the coin, more than 5,000 options for September puts at US$50 -- well below Tesla’s US$321.64 closing price on Wednesday -- were traded, though investors paid less for that way out-of-the-money bet.
--With assistance from Luke Kawa