Tesla’s shares hit an all-time high after regulators postponed a planned sales suspension. This suspension was due to claims from the Department of Motor Vehicles about misleading advertising related to Tesla’s self-driving features. If the suspension had gone forward, it could have caused a 30-day halt in sales and production in California, which is Tesla’s main market. The delay gives Tesla more time to resolve these issues.

Tesla’s Challenges

Earlier in 2025, Tesla faced difficulties, but its shift towards robotaxis and humanoid robots in the second quarter boosted market confidence. The company’s share price increased to $495.28, exceeding the previous peak of $488.54 from a year ago. Currently, Tesla’s stock stands at $487.63. The company’s recent developments and regulatory challenges continue to shape its stock performance. With Tesla shares reaching a new high, implied volatility has jumped. This increase is due to the temporary relief from the California sales suspension, causing options premiums to rise. Traders should be careful when buying calls or puts at these high prices, as a lot of the positive news may already be reflected in the stock. Strong momentum exists, fueled by Tesla’s successful shift to robotaxis earlier in 2025. Recent checks indicate that Q4 delivery expectations are high, with initial November 2025 data showing a 14% year-over-year increase in global production. This strong performance may support buying call spreads to take advantage of further gains while managing risk.

Regulatory Concerns from the DMV

However, the regulatory threat from the DMV is still present, just delayed. This ongoing uncertainty makes buying protective puts for February and March 2026 expirations a wise strategy against a negative decision. We saw similar volatility during earlier regulatory challenges in the 2020s, where initial relief often led to ongoing fluctuations. Given the uncertain regulatory outcome, we can expect significant price movements in either direction soon. Options data for the January 2026 expiration indicates a possible move of over 15%, suggesting that a long straddle could be a successful strategy. This approach allows traders to gain from large price changes, regardless of whether the news is positive or negative. All of this is happening while the broader market assesses recent economic data. The November 2025 Consumer Price Index (CPI) report showed a lower-than-expected 2.9% increase. This reinforces the belief that the Federal Reserve will keep interest rates steady through the first quarter of 2026. While this overall economic situation is generally favorable for growth stocks, the specific risk surrounding Tesla remains a key concern for now. Create your live VT Markets account and start trading now.

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