Trade Alert - (TSLA) October 31, 2024 - TAKE PROFITS - SELL

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.

 

TRADE ALERT - (TSLA) - TAKE PROFITS

SELL the Tesla (TSLA) November 2024 $320-$330 in-the-money vertical bear put debit spread at $9.95 or best

 

Closing Trade

10-31-2024

expiration date: November 15, 2024

Portfolio weighting: 10% weighting

Number of Contracts = 12 contracts

 

We really got a triple play in this short position, even though you didn’t realize it. The stock dropped from $270 to $252. The implied volatility of the options dropped from 55.5% to 51%. And one-third of the time value of the options decayed.

As a result, you get to claim 95.83% or the maximum potential profit on only four trading days. The risk-reward of continuing is no longer favorable.

I also get to duck the election risk by coming out now. A Trump win would send Tesla stock soaring, as Elon Musk would gain control of all the many regulatory bodies that oversee him.

Therefore, I am selling the Tesla (TSLA) November 2024 $320-$330 in-the-money vertical bear put debit spread at $9.95 or best.

As a result, you get to take home $1,380 or 13.07% in 4 trading days. Well done, and on to the next trade.

DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.

If you live in a foreign time zone when the US stock market is closed, such as Australia, simply enter a spread of Good-Until-Cancelled orders overnight, like at $9.95, $9.90, $9.85, $9.80, and $9.75. You should get done on some or all of these.

Tesla gained a staggering $120 billion in market capitalization in two days since its blockbuster earnings report. It is the largest gain in market cap in the shortest amount of time in history.  The stock is now 23% up on the week and 50% above the August low. It is right at major upside resistance.

While I believe that Tesla will break out someday, it won’t on this run, and certainly not in the next 15 trading days.

Elon Musk really checkmated the rest of the EV industry with his massive price cuts and buyer incentives, which is 35% after adding in newly qualifying government subsidies.

With this trade, I am willing to bet that Tesla shares will not rise above $320 by the November 15 option expiration in 15 trading days.

Tesla will remain the top EV maker for the next decade easily.

Here are the specific trades you need to exit this position:

Sell 12 November 2024 (TSLA) $330 puts at………..................…$77.00

Buy to cover short 12 November 2024 (TSLA) $320 puts at…….$67.05

Net Proceeds:………………………….……….………........................……$9.95

Profit: $9.95 - $8.80 = $1.15

(12 X 100 X $1.15) = $1,380 or 13.07% in 4 trading days.

 

 

 

 

 

If you are uncertain about how to execute an options spread, please watch my training video by clicking here.

The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep-in-the-money spread trades can be enormous.

Don’t execute the legs individually, or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.

Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.