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) June 2019 $240-$250 in-the-money vertical BEAR PUT spread at $8.90 or best
Opening Trade
6-10-2019
expiration date: June 21, 2019
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Tesla has enjoyed a meteoric 20% rally off of the multiyear bottom it set a week ago. Therefore, very short-term trading opportunities are opening up on the short side. Implied volatilities on the options are still sky high, thanks to the recent extreme movements.
Therefore, I am buying the Tesla (TSLA) June 2019 $240-$250 in-the-money vertical BEAR PUT spread at $8.90 or best.
This is a bet that Tesla shares will not rise above the $240 strike price by the June 21 option expiration in 9 trading days. It is also a bet that the stock could rally short of last month’s breakdown level, but no more. There is substantial resistance at the 50-day moving average at $238 which should give us some help.
With our existing position in the Tesla (TSLA) June 2019 $140-$150 in-the-money vertical BULL CALL spread, this sets up what is known in the trade as a “short strangle.” These combined positions are a bet that Tesla shares won’t rise above $230 or fall below $150 by June 21st. One position partially hedges the other.
If you don’t trade options, stand aside. This is a short-term options expiration play only.
Here are the specific trades you need to execute to obtain a $10,000 position. Don’t pay more than $9.30 or you’ll be chasing:
Buy 12 June 2019 (TSLA) $250 puts at…………..………$36.50
Sell short 12 June 2019 (TSLA) $240 puts at………….$27.60
Net Cost:………………………….………..…………........….....$8.90
Potential Profit: $10.00 - $8.90 = $1.10
(12 X 100 X $1.10) = $1,320 or 12.35% in 9 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
You must be logged into your account to view the video.
Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
