Trade Alert - (TSLA) January 22, 2025

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 $540-$550 in-the-money vertical bear put debit spread at $8.80 or best

Opening Trade

1-22-2025

expiration date: February 21, 2025

Portfolio weighting: 10% weighting

Number of Contracts = 12 contracts

I figured that we would have some post-inauguration rally, albeit a brief one, so I have been holding off on my shorts. Tesla has now risen $70, or 18.91% off the January low.

Given the company’s extraordinary 70% implied volatility, the highest of any major company, I believe we can enter a low-risk/high-return short position here. This is against a backdrop of Tesla sales that may be flat or down this year. Hoopla can only go so far.

To lose money on this trade, Tesla would have to raise $5.6 every day for the next 21 trading days. I don’t see it happening.

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.

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.

Therefore, I am buying the Tesla (TSLA) February 2025 $540-$550 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 $9.00 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 $9.00, $9.10, $9.20, $9.30, and $9.50. 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 $540 by the February 21 option expiration in 22 trading days.

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

Buy 12 February 2025 (TSLA) $550 puts at………....…$136.00

Sell short 12 February 2025 (TSLA) $540 puts at…….$126.20

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

Potential Profit: $10.00 - $8.80 = $1.20

(12 X 100 X $1.20) = $1,440 or 13.64% in 22 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.

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