NEW YORK (Reuters) - Investors are piling into bullish options bets on Tesla shares, with the stock hitting its highest level in more than two years on bets that CEO Elon Musk's close ties to President-elect Donald Trump may benefit the electric car maker.

Tesla's shares were up about 8% to $346.12 on Monday and have rallied more than 35% since the Nov. 5 election. They now stand at their highest level since April 2022.

Tesla's contracts were the most heavily traded options on individual stocks on Monday, with some 2.5 million contracts changing hands by noon - more than twice the usual pace, according to Trade Alert.

"It's euphoric," said Steve Sosnick, chief strategist at Interactive Brokers. "Tesla is by far the most active option at our shop."

He noted a heavy concentration of call contracts at the $400 level, some 13% above the stock's current price. Trade Alert data showed much of the trading concentrated in near-term contracts, with options expiring by Friday making up about 56% of the total trading volume.

Musk has supported Trump for months and contributed at least $119 million to a pro-Trump spending group, federal records show. The billionaire's business ventures, which in addition to Tesla EVs range from SpaceX rockets to Neuralink brain chips, depend heavily on regulation, subsidies and policy, and analysts said they could benefit from a friendly administration.

On Monday, Wedbush Securities raised its target price on Tesla shares to $400 from $300, saying they see the Trump White House win as a "gamechanger for the autonomous and AI (artificial intelligence) story for Tesla and Musk over the coming years."

Tesla options struck at $350 and $400, and set to expire by Friday, were the two most actively traded contracts with combined volume of about 180,000 contracts.

The bullish options action was also likely helping to push the stock higher, as options dealers who sold upside contracts react to the soaring stock by buying more of the shares to cover their own risk.

"If enough people speculate on certain strikes, the stock can have a tendency to move toward those strikes," Sosnick said.

The big jump in the stock price and massive options interest also means Tesla call options are growing pricey and could draw sellers, said Brent Kochuba, founder of financial insights company SpotGamma.

Should the stock fail to keep up with its recent moves, it might lead to a drop in the price of those calls, he said.

"That can pressure the stock down," Kochuba said.