Trade Alert - (TSLA) April 24, 2025 - BUY

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) - BUY

Buy the Tesla (TSLA) May 2025 $320-$330 in-the-money vertical bear put debit spread at $8.80 or best

 

Opening Trade

4-24-2025

expiration date: May 16, 2025

Portfolio weighting: 10% weighting

Number of Contracts = 12 contracts

We have just seen a nice $40, or 18% rally in the Tesla shares, creating another window for a short play. The one thing that could have created a spike up in shares has happened, Elon Musk’s announcement that he is substantially paring back his time with DOGE.

Plunging sales, profits down 71%, an unfolding recession, high interest rates, and the imminent demise of EV subsidies, what's not to hate here?

Tesla is toast.

With a European boycott of its products because of Elon Musk’s political choices, there is no way that the company will reach its 2 million sales target for 2025. 1.7 million or less, less than last year, is more likely. Picket lines are not taking place at the California showrooms and factory. Showrooms in Europe are being set on file.

Given the company’s still high 54% implied volatility, the highest of any major company, I believe we can enter a low-risk/high-return short position here. This is against the backdrop of Tesla sales, which may be flat or down this year. Hoopla can only go so far.

You may have to play around with the strike prices and scale in to get this trade done. Executing spreads 28% in-the-money is more art than science, and posted prices in the market are more theoretical than real.

This trade also benefits from huge upside resistance from the 200-day moving average at $291.19.

Therefore, I am buying the Tesla (TSLA) May 2025 $320-$330 in-the-money vertical bear put debit spread at $8.80 or best.

DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.

Don’t pay more than $9.20 or you will be chasing.

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.

If you live in a foreign time zone when the US stock market is closed, such as Australia, or don’t want to sit in front of a screen all day, simply enter a spread of Good-Until-Cancelled orders overnight, like  $8.80, $8.90, $9.00, $9.10, and $9.20. You should get done on some or all of these.

With this trade, I am willing to bet that Tesla shares will not rise above $320 by the May 16 option expiration in 16 trading days.

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

Buy 12 May 2025 (TSLA) $330 puts at……….…...$76.00

Sell short 12 May 2025 (TSLA) $320 puts at…….$67.20

Net cost:……………………….……….……………...........$8.80

Potential Profit: $10.00 - $8.80 = $1.20

(12 X 100 X $1.20) = $1,440 or 13.64% in 16 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.