Options volume erupts in retail trading favorites as Robinhood, Tesla surge

So much for the September seasonal doldrums.

Options traders are kicking off the historically worst month for stocks by piling on bullish bets on a handful of retail trading favorites that are known for big swings and speculative activity.

Trading volume was above average on Thursday in stocks like Robinhood Markets, Palantir Technologies and Elon Musk giants Tesla and SpaceX — which were the top- and fourth-most traded stocks by options volume respectively.

The trading flows look discernably bullish with calls outpacing puts by at least 2 to 1 in each. While each name has a stock-specific story, traders may also be taking advantage of steep drop-off in implied volatility both in the S&P 500 and single stocks as the Cboe Volatility Index (VIX) trades below 15.

Retail trader favorite and surging trading platform stock Robinhood is seeing the most outwardly bullish action of these four names in Thursday’s session. Calls are trading more than twice as heavily as puts through midday, with nearly three times as many calls bought relative to puts. Put selling outweighs put buying in the name as well, signaling confidently bullish sentiment from traders on more than triple average daily trading volume.

Robinhood stock is suddenly positive on the year after Thursday’s huge move higher, and within striking distance of a fresh year-to-date high.

A similarly outsized stock move higher in Palantir is translating to heightened options activity as well. The software stock finds itself inside the top 10 most traded single-stock options on nearly double the average daily volume. Traders are buying twice as many calls than puts, with more puts being sold than bought.

But it’s all about Musk mania ahead of this evening’s Tesla Cybercab event in Austin, Texas. Traders in both Tesla and SpaceX are buying twice as many calls than puts, with significantly more puts being sold than bought.

The action in SpaceX comes as the stock retakes the key $150 level, a price it hasn’t closed above since early July. It also comes alongside a huge drop-off in volatility. SpaceX’s current 30-day implied volatility is in just the 4th percentile, and about half its historical average since going public June 12.

“Bitcoin ripping is great for Robinhood and Snowflake was the catalyst for Palantir,” said Charles Moon, a momentum trading specialist at Prosper Trading Academy. “Retail’s getting aggressive because all they need is a reason to be. It’s a good sign.”