Trade Alert - (TSLA) January 14, 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) February 2025 $300-$310 in-the-money vertical bull call debit spread at $8.00 or best

 

Opening Trade

1-14-2025

expiration date: February 21, 2025

Portfolio weighting: 10% weighting

Number of Contracts = 13 contracts

In a dull market like this one, you have to go for the highest volatility names to earn your crust of bread. That would be Tesla, which is sporting a sky-high 70% implied volatility, far and away the highest of any major name in the market. Buying with the Mad Hedge Market Timing Index at a lowly 28 is also pretty attractive and low risk.

We have just seen a massive 23% correction in the shares in the wake of the first-ever YOY decline in sales, so the bad news is in the price. I believe there is just enough post-election euphoria to elevate this stock for at least two more weeks.

You may have to play around with the strike prices and scale in to get this trade done. Executing spreads of 35% in the money is more art than science and posted prices in the market are more theoretical than real.

It is easy to pick the one company that benefits the most from a Trump presidency and that is Tesla. With great earnings behind us, it is hard to see any negative announcements affecting the stock over the short term.

One of the most regulated companies in the country is now looking at an absence of regulation. For example, that will bring a much earlier introduction of Full Self Driving in the US, or FSD, already used in China. That can be sold in the US for $15,000 a car. It is unlikely that a Harris administration was ever going to approve FSD for the US.

It is the most money made by an individual in the shortest amount of time history and Musk will likely get all of this tax-free.

Therefore, I am buying the Tesla (TSLA) February 2025 $300-$310 in-the-money vertical bull call debit spread at $8.00 or best.

DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.

Don’t pay more than $9.70 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  $8.00, $8.10, $8.20, $8.30, and $8.40. You should get done on some or all of these.

For the first time ever, Tesla is not trading off their monthly vehicle sales, which recently have been flat. Instead, the stock is focusing on the company’s long-term goals, many of which are finally starting to kick off profits.

Those would include Full self-driving software (FSD), the global electric charging network, roll out of the Cybertruck and semis trucks, lithium processing, and recycling, solar energy, industrial-scale battery storage, and other moonshots we haven’t heard about. Wireless charging should go mainstream next year.

These were always the basis of my long-term forecast for the shares of $1,000.

Elon Musk recently revealed the Tesla Robotaxi, bringing 50 with him to give rides to party guests in a Warner Brothers simulated city. Musk, who arrived at the stage in one of the robotaxis - called Cybercab - said production will start in 2027. They will cost 20 cents a mile to operate.

The vehicle will eventually be for sale for under $30,000. Optimus robots served drinks, and the entire event was covered by video drones. The Robotaxis uses Inductive charging where they just park over the pad and it gets wirelessly recharged. Elon certainly can put on a show, but the stock is less so.

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 fall below $310 by the February 20 option expiration in 27 trading days.

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

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

Buy 13 February 2025 (TSLA) $300 calls at……….....…$117.00

Sell short 13 February 2025 (TSLA) $310 calls at…….$109.00

Net cost:………………………….……….………..................……$8.00

Potential Profit: $10.00 - $8.00 = $2.00

(13 X 100 X $2.00) = $2,600 or 25.00% in 27 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.