Tesla has piqued the interest of professional and retail traders alike as they try to capitalize on the electric car maker's wild swings.
and a CNBC contributor, said professional options traders are "fading" Tesla's big swings by betting on out-of-the-money puts when the underlying stock surges and on out-of-the-money calls when it drops sharply.
However, such trades are not for the faint of heart and can be expensive, especially when talking about Tesla. Najarian pointed out Tesla's implied volatility has surged to about 70% from 45% in mid-November. Tesla's 10-day volatility also soared to about 130% from 60%. "If you have a strategy where you're buying strength then you're stopping out if it takes out a previous day's low, then that's worked out really well," he said. "I would think that if this thing is going to continue to have strength and legs, it shouldn't really take off the previous day's low with too much authority."
However, Tesla's surge may also be attracting inexperienced traders. On Feb. 3, about 12,000 Robinhood brokerage accounts bought Tesla for the first time.
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