Trade Alert - (TSLA) June 16, 2023 - EXPIRATION
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) - EXPIRATION
EXPIRATION of Buy the Tesla (TSLA) June 2023 $120-$130 in-the-money vertical bull call debit spread at $8.80 or best
Closing Trade
6-16-2023
expiration date: June 16, 2023
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Just to be clear, this position does not expire until 4:15 PM on the Friday, June 16 option expiration. Since I don’t want to overwhelm you with expiration trade alerts all at once, I am feeding this one out now.
However, with the stock now an eye-popping 95.38% above its nearest strike price, I think it’s safe to call this one a win. This is a classic example of how over time stock owners make a lot more money than option spread players. This is the most a call spread has closed in-the-money in the 15-year history of the Mad Hedge Fund Trader.
As a result, you get to take home $1,440, or 13.64% in 25 trading days.
Well done and on to the next trade.
You don’t have to do anything with this expiration.
Your broker will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Tuesday morning June 20 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
Elon Musk has just appointed Linda Yaccarino as the new CEO of Twitter, poaching her from online advertising at NBC. This is a positive for Tesla, as it frees up the heavy burden of turning around Twitter from Musk, allowing him to devote more time to Tesla. It also reduced the risk that Musk will sell more Tesla shares to finance said turnaround.
With the Volatility Index ($VIX) at $14.25 there are few trades out there right now and I’m thinking of going on strike. But with Tesla option implieds at 53% and (SPY) options at a pitiful 13.8%, this was the one trade to do.
Among the highest implied volatility in the market at 53%, a deep in-the-money call spread strategy is the best way to play this.
Tesla is now the most widely owned stock in the world and accounts for a staggering 6% of the options market.
If you don’t do options, buy the stock on a bigger dip. Even if the (SPY) revisits its 2022 low at $355, I doubt that Tesla falls much from here.
An onslaught of new Tesla positives will hit the market in 2023. The new Cybertruck comes out and there is a two-year waiting list out the gate and deposits in hand for 1.5 million vehicles.
The company is generating such enormous cash flows that it is like to carry out $10 billion in share buybacks, especially with the price this low. There are no real competitors on the horizon, except for a handful with big losses outside of China.
All the new negatives are now in the price, the China lockdowns, the product recalls, the Shanghai shutdown, recession fears, and even Elon Musk himself going from a premium to a discount, are now in the price. At the end of the day, Tesla really is a consumer discretionary stock.
Tesla will remain the top EV maker for the next decade easily.
This was a bet that the Tesla (TSLA) would not trade below $130 by the June 16 option expiration day in 25 trading days.
Here is the specific accounting you need to close out this position:
EXPIRATION of 12 June 2023 (TSLA) $120 calls at………....…$135.55
EXPIRATION of short 12 June 2023 (TSLA) $130 calls at…….$125.55
Net Proceeds:……………………………..…….………................………$10.00
Profit: $10.00 - $8.80 = $1.20
(12 X 100 X $1.20) = $1,440, or 13.64% in 25 trading days.
