Trade Alert - (TSLA) July 24, 2024 - TAKE PROFITS - SELL

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.

 

(TSLA) – TAKE PROFITS

SELL the Tesla (TSLA) August 2024 $310-$320 in-the-money vertical bear put spread at $9.95 or best

 

Closing Trade

7-24-2024

expiration date: August 16, 2024

Portfolio weighting: 10% weighting

Number of Contracts = 12 contracts


My assumption two weeks ago that Tesla was wildly overbought for the short term, up 50% in four weeks, proved correct. It was one of the greatest one-month creations of shareholder equity in stock market history. My bet that (TSLA) earnings would disappoint was also spot on. As a result, the shares have fallen by $54, or 20%.

Tesla is now one of the most widely owned stock in the world. With an eye-popping 67% implied volatility compared to only 12% for the Volatility Index ($VIX), Tesla put options are among the most expensive in the market.

Therefore, I am selling the Tesla (TSLA) August 2024 $310-$320 in-the-money vertical bear put spread at $9.95 or best.

As a result, you get to take home $1,380 or 13.07% in 9 trading days. Well done and on to the next trade.

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 lower your offer by 5 cents with a second order.

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.

Tesla Q2 sales came in better than expected but are still down YOY, delivering 444,000. The Chinese government recently approved Tesla cars for purchase. Tesla has recently been rediscovered as one of the cheapest AI plays out there.

Don’t get me wrong. I still love Tesla for the long term and expect it to reach $1,000 someday. This is just a summer short-term options trade.

Put spreads this far in the money trade all over the map but give this your best shot.

Tesla shares plunged last year because Elon Musk sold an additional $3.6 billion worth of shares in December, bringing his total for the year to a mind-numbing $40 billion, according to SEC filings.

This was a bet that Tesla shares would not rise above $310 by the August 16 option expiration in 26 trading days.

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

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

Buy 12 August 2024 (TSLA) $320 puts at………...…$102.00

Sell short 12 August 2024 (TSLA) $310 puts at….….$92.05

Net Proceeds:………………………..…….……………..........$9.95

Profit: $9.95 - $8.80 = $1.15

(12 X 100 X $1.12) = $1,380 or 13.07% in 9 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.