Trade Alert - (TSLA) December 18, 2018

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.

Alert

Trade Alert - (TSLA) – TAKE PROFITS

SELL the Tesla (TSLA) December 2018 $400-$430 in-the-money vertical BEAR PUT spread at $29.90 or best

Closing Trade-NOT FOR NEW SUBSCRIBERS

12-18-2018

expiration date: December 21, 2018

Portfolio weighting: 10%

Number of Contracts = 4 contracts

Time to clock another win for the Mad Hedge Alert Service.

Since I add this position a month ago, Tesla (TSLA) shares chopped around and then fell big, some $35. As a result, we have nearly achieved the maximum potential value in this position even though it still has three days until the December 21 option expiration.

I am therefore taking profits on my short position and selling the Tesla (TSLA) December 2018 $400-$430 in-the-money vertical BEAR PUT spread at $29.90 or best. You don’t want to let your shorts grow hair on them when we are at the most oversold condition in history and the Mad Hedge Market Timing Index at an incredible low of 5. This has been the worst December since 1931.

By coming out here you get to earn a $1,360 or 12.83% in 21 trading days. The risk/reward of continuing for three more trading days to get the last pennies is not favorable.

If you own the stock, keep it for the long term. Tesla will probably break out to a new all-time high above $400 a share sometime in early 2019.

I firmly believe that Tesla shares will rise tenfold from the current level over the next decade, making it the world’s largest carmaker.

After all, I just bought my third one, a fully tricked out Model X P100D. I believe I am one of the oldest continuous Tesla Owners in existence, having picked up one of the first Tesla Model S’s in 2009, chassis no. 125. I’ll never buy another car.

The company has just enjoyed a rare spate of good news. Robin Denholm, the finance chief at Australian telecom firm Telstra, has been brought in as the new chairman at Tesla. Now we have a supervising adult over founder Elon Musk. At last, Elon can focus solely on building electric cars. Maybe he can get some sleep too.

The Fremont, CA company has been beating its production target for the new Tesla 3, now over 7,000 units a week. A massive short covering rally has taken the stock close to a new all-time high. Consumers are accelerating orders to beat the expiration of the $7,500 electric car tax credit at the end of the year.

However, this tenfold move is not going to happen just yet. The stock is now at the top of a two-year trading range. Enormous new short selling is kicking in as we approach the old high at $394. The stock has moved too far, too fast. Tesla was virtually the only stock that went UP during the fourth quarter crash.

This was a bet that Tesla shares will not rise above $400 by the December 21 option expiration in 21 trading days.

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

Sell 4 December 2018 (TSLA) $430 puts at………….………$85.00

Buy to cover short 4 December 2018 (TSLA) $400 puts at….$55.10
Net Proceeds:………………………….………..………….….....$29.90

Profit: $29.90 - $26.50 = $3.40

(4 X 100 X $3.40) = $1,360 or 12.83% in 21 trading days.

Thanks for the New Car Tesla!

To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.

If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.

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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.

Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.

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 close to expiration.

If you don’t get it done, don’t worry. There are another 250 Trade Alerts coming at you over the coming 12 months.

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