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.
Mad Hedge AI Trade Alert
(TSLA) - BUY
Buy the Tesla (TSLA) October 2023 $200-$210 in-the-money vertical bull call debit spread at $9.00 or best
Opening Trade
10-2-2023
expiration date: October 20, 2023
Portfolio weighting: 10%
Number of Contracts = 11 contracts
It has been a long wait for the Mad Hedge AI Service to knock out a trade alert simply because AI still thinks the market is expensive.
Tesla is cheap, but not in terms you might recognize. The stock has just completed a 30% correction and appears to be in a new uptrend. Also, the options have an implied volatility of 53%, compared to only 16% for the S&P 500, one of the richest in the market.
There is major support for this particular call spread right under the 200-day moving average at $210. This trade has only 14 trading days to run until its October 20 expiration.
Tesla Q3 sales are out after the close and are expected to be weaker than expected. However, the fundamentals are about to reaccelerate with the imminent launch of the Cybertruck where the company has 2 million orders.
Options this far in the money are illiquid so you may have to play around a bit with strike prices and prices to get done.
Therefore, I am buying the Tesla (TSLA) October 2023 $200-$210 in-the-money vertical bull call debit spread at $9.00 or best.
Don’t pay more than $9.40 or you’ll be chasing.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 10 cents with a second order.
After markets have big moves like we saw in January, you tend to get no moves for a couple of months. Too much performance and market action was pulled forward in H1.
Tesla is now the most widely owned stock in the world and accounts for a staggering 6% of the options market.
If you don’t do options, buy the stock on a bigger dip. Even if the (SPY) revisits its 2022 low at $355, I doubt that Tesla falls much from here and my long-term target is $2,000 or higher.
The company is generating such enormous cash flows that it is likely to carry out $10 billion in share buybacks, especially with the price this low. There are no real competitors on the horizon, except for a handful with big losses outside of China.
Tesla will remain the top EV maker for the next decade easily.
This is a bet that Tesla (TSLA) will not trade below $210 by the October 20 option expiration day in 14 trading days.
Here are the specific trades you need to execute this position:
Buy 11 October 2023 (TSLA) $200 calls at……...….…$54.00
Sell short 11 October 2023 (TSLA) $210 calls at…….$45.00
Net Cost:……………………...................…….……….………$9.00
Potential Profit: $10.00 - $9.00 = $1.00
(11 X 100 X $1.00) = $1,100, or 11.11% in 9 trading days.
If you are uncertain on 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.
