It’s another when they simply buy call options<\/a>, hoping momentum continues in their favor.<\/p>\n This option buying spree has been behind the recent parabolic price action, not actual stock ownership…<\/p>\n You see, the options market itself has become somewhat of a bubble…<\/p>\n One sign of a bubble is when it starts to pervade society, and this is exactly what’s happening right now.<\/p>\n Novice traders, with little-to-no experience other than YouTube videos (put together by other novice traders), have noticed that you can make crypto-like returns through the options market, which is true. <\/p>\n For instance, Delta Report<\/em> subscribers were able to more than triple their money on Wheaton Precious Metals (WPM) for a 220% gain.<\/p>\n That’s because we rely on both economic and fundamental principles to make trading decisions.<\/p>\n And more importantly, we don’t just concentrate on the direction of the underlying stock – that’s only half the battle…<\/p>\n We slice and dice the option premium<\/a> into the sum of its parts to see its true value. And that’s why fundamentally driven options strategies can generate crypto-like returns even when the market gets slow.<\/p>\n So, when Elon Musk put out a Twitter poll asking whether he should sell 10% of his stake in Tesla (TSLA) – which topped out at $1,200 a share and promised to abide by the results – it was stunning to see how the options market was still pricing in gains of 50% or more by the November 17 expiration date<\/a>.<\/p>\n Regular Market Minute<\/em> readers got that warning loud and clear in our October 29 essay<\/a> where we gave you a glimpse into how we assess value in call options, using TSLA as example (before the poll came out).<\/p>\n Twitter voted to sell… and he did.<\/p>\n So now every single one of those call options we highlighted are set to expire and will be worthless.<\/p>\n Which brings me back to the original point…<\/p>\n Right now, option volumes are driving this market higher, not new stock ownership.<\/p>\n It’s not just TSLA though, call options across the market are being snatched up by frenzied investors.<\/p>\n Take a look at this chart…<\/p>\n (Click here to expand image)<\/a><\/p>\n The recent spike is substantial, and the fast and furious selloff in TSLA from its peak may be what’s in store for broader parts of the market.<\/p>\n You see, owning a call option gives you the right to buy<\/em> the stock at a predetermined date and price… you don’t own<\/em> the shares until the option is exercised<\/a> (assuming it doesn’t expire worthless).<\/p>\n But here’s what most people don’t know…<\/p>\nWhat Tesla Means for the Options Market…<\/strong><\/h2>\n
![\"\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202111\/20211112-mm-01_qpe374.png\")
<\/p>\n