Trade Alert – (TSLA) May 13, 2025 – STOP LOSS – 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.

Trade Alert –  (TSLA) – STOP LOSS

SELL the Tesla (TSLA) June 2025 $370-$380 in-the-money vertical bear put debit spread at $8.00 or best

 

Closing Trade

5-13-2025

expiration date: June 20, 2025

Portfolio weighting: 10% weighting

Number of Contracts = 12 contracts

Part of the bear case for Tesla was that generous government tax subsidies for EVs would imminently be eliminated, putting a serious dent in the company’s sales.

I just learned that the latest House budget bill doesn’t eliminate the subsidies immediately, but phases them out over four years. This takes some of the pressure off (TSLA) shares. Also, the presidential promotion of Tesla has been relenting and unending.

Since I have huge profits to protect, I am going to take a small loss here.

Part of our loss was mitigated by a week of time decay and a drop in (TSLA) option implied volatility from 66% to 60%. Gotta love this put spreads!

Therefore, I am selling the Tesla (TSLA) June 2025 $370-$380 in-the-money vertical bear put debit spread at $8.00 or best

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.

If you don’t want to sit in front of a computer screen all day or 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, $7.90, $7.80, $7.70, $7.60, and $7.50. You should get done on some or all of these.

With this trade, I was willing to bet that Tesla shares would not rise above $370 by the June 20 option expiration in 29 trading days.

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

Sell 12 June 2025 (TSLA) $380 puts at…………………………$56.00

Buy to cover short 12 June 2025 (TSLA) $370 puts at…….$48.00

Net Proceeds:……………………….……….……………………………$8.00

Loss: $8.80 – $8.00 = $0.80

(12 X 100 X $0.80) = $960

 

 

 

 

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.