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- Tesla stock has earned Goldman Sachs around $100 million from a number of trades this year.
- A report by International Financing Review said the purchase of Tesla options helped Goldman Sachs post better performance than expected in equity trading in Q2.
- Tesla’s stock has risen more than 800% in the last 12 months.
- Sources told IFR investors also bought Tesla convertible bonds and corporate equity derivatives.
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This year’s sizzling rally in shares of electric carmaker Tesla did not just prove profitable to amateur day-traders, it also netted multi-million dollar returns for the likes of Goldman Sachs, which made more than $100 million from its trades on the company’s stock.
Goldman Sachs’ equities trading division raked in roughly $100 million from trading Tesla shares, options and other derivatives, according to a report last week by International Financing Review, which cited confidential sources.
Those deals enabled the US investment bank to post much better performance than expected in its trading division over the course of the second quarter, when Tesla shares doubled in value.
Goldman Sachs’ equities revenue hit $2.9 billion, its highest in 11 years in Q2 2020. Fixed-income sales and trading brought in $4.2 billion, its best reading in nine years, as the Federal Reserve’s bond-buying spree drove investors back into the corporate credit market.
Tesla, which has rallied more than 800% in the last 12 months, has been one of the biggest gainers on the US stock market this year.
The broader stock indices have all risen sharply since hitting multi-year lows in March, when the coronavirus crisis was at its worst. The Nasdaq Composite has gained 62% in that time, while Tesla has risen by around 500%, compared with a near-100% rise in shares of iPhone maker Apple and an 80% increase in shares of online retailer Amazon in that time.
Tesla has attracted investors both large and small.
Earlier this month, the Financial Times reported SoftBank was the "Nasdaq Whale" which snapped up $4 billion in options that helped fuel a rally in the Nasdaq to record highs this summer.
Tesla benefited from the highest increase in options trading activity, IFR said, citing research by Barclays bank.
Barclays said demand for single-stock call options are roughly double that of demand for put options. This is the largest gap in at least five years, the bank said, highlighting the extreme bullishness among investors.
Barclays estimates Tesla's option volumes rose from $124 billion to $1.45 trillion between July 2019 to July 2020.
Amazon was the second biggest beneficiary from such options activity, as volumes rose from $632 billion to $1.48 trillion in the period, Barclays said.
Aside from call options, Goldman Sachs also bought Tesla's convertible bonds and equity derivatives, which holders can use to hedge their holdings of the underlying stock, sources told IFR.
Tesla's convertible bonds which have a face value of more than $4 billion climbed sharply this summer, also contributing to Goldman's windfall on the electric car producer.