Tesla Stock Forms Bullish Pattern, Options Traders Place Their Bets

Tesla Inc TSLA has filed an application with the Ministry of Industry and Information Technology in China to produce five more versions of its Model Y electric SUV. The vehicles, which will be produced at Tesla’s Gigafactory Shanghai, may be exported to other markets.

Tesla recently launched its Model Y Standard range in China, a cost-effective version of its electric SUV, with deliveries expected to begin next month. The vehicle was briefly launched in the U.S. earlier this year before Tesla decided to pull it from the market.

Tesla’s stock has spent the last seven trading days consolidating an 11% bull run. The sharp move higher, paired with the consolidation has created a bull flag pattern with the pole of the flag created between July 29 and Aug. 2 and the flag formation made between Aug. 3 and Wednesday.

Options traders may be betting the bull flag will be a recognized pattern and Tesla’s stock will break up bullish from it in the near term. On Wednesday, traders purchased over $1.9 million worth of call contracts available for Tesla, with one trader spending $852,200 on a single order.

See Also: Not Just Tesla, SpaceX, Elon Musk — Coinbase Is Also Finding Popularity With Hedge Funds -

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The TSLA Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 9:32 a.m., a trader executed a call sweep near the ask of 299 Tesla options with a strike price of $730 expiring on Aug. 13. The trade represented a $73,554 bullish bet for which the trader paid $2.46 per option contract.
• At 9:34 a.m., a trader executed a call sweep near the ask of 200 Tesla options with a strike price of $730 expiring on Aug. 13. The trade represented a $55,200 bullish bet for which the trader paid $2.76 per option contract.
• At 9:34 a.m., a trader executed a call sweep near the ask of 298 Tesla options with a strike price of $750 expiring on Aug. 20. The trade represented a $131,120 bullish bet for which the trader paid $4.40 per option contract.
• At 9:35 a.m., a trader executed a call sweep near the ask of 200 Tesla options with a strike price of $700 expiring on Sept. 17. The trade represented a $852,200 bullish bet for which the trader paid $42.61 per option contract.
• At 9:41 a.m., a trader executed a call sweep near the ask of 285 Tesla options with a strike price of $715 expiring on Aug. 13. The trade represented a $154,755 bullish bet for which the trader paid $5.43 per option contract.
• At 10:13 a.m., a trader executed a call sweep near the ask of 400 Tesla options with a strike price of $710 expiring on Aug. 13. The trade represented a $281,600 bullish bet for which the trader paid $7.04 per option contract.
• At 10:15 a.m., a trader executed a call sweep near the ask of 201 Tesla options with a strike price of $700 expiring on Aug. 20. The trade represented a $424,914 bullish bet for which the trader paid $21.14 per option contract.
• At 10:16 a.m., a trader executed a call sweep near the ask of 203 Tesla options with a strike price of $720 expiring on Aug. 13. The trade represented a $71,050 bullish bet for which the trader paid $3.50 per option contract.

TSLA Price Action: Shares of Tesla were trading lower by 0.5% at $706.28.