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) - BUY
Buy the Tesla (TSLA) April 2024 $140-$150 in-the-money vertical bull call debit spread at $9.20 or best
Opening Trade
3-26-2024
expiration date: April 19, 2024
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I think Tesla has suffered enough.
After a 62.26% decline, I believe the bottoming process has begun. At some point, the stock will start discounting the launch of the $25,000 Model 2 in 2025, the next generation mass market EV. The Cybertruck, just out, has been wildly successful.
Therefore, I am buying the Tesla (TSLA) April 2024 $140-$150 in-the-money vertical bull call debit spread at $9.20 or best.
Don’t pay more than $9.50 or you’ll be chasing.
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 increase your bid by 10 cents with a second order.
With the highest implied volatility in the market at 56%, the payoff on this spread is huge.
Ford Motor’s (F) halt of its assembly line for the F-150 Lightning because of battery design problems is a further support for Tesla on the long side.
If you don’t do options, buy the stock on a bigger dip. Even if the (SPY) revisits its 2023 low at $370, I doubt that Tesla falls much from here.
Call spreads this far in the money trade all over the map but give this your best shot.
An onslaught of new Tesla positives will hit the market in 2024. The new Cybertruck is 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 likely to carry out $10 billion in share buybacks, especially with a price this low. There are no real competitors on the horizon, except for BYD Motors in China (BYDFF).
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 is a bet that Tesla (TSLA) will not trade below $150 by the April 19 option expiration day in 14 trading days.
Here are the specific trades you need to execute this position:
Buy 12 April 2024 (TSLA) $140 calls at………........…$42.00
Sell short 212 April 2024 (TSLA) $150 calls at…..….$32.80
Net Cost:………………………….……….……...................…$9.20
Potential Profit: $10.00 - $9.20 = $0.80
(12 X 100 X $0.80) = $960, or 8.69% in 14 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.
