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) December 2022 $140-$150 in-the-money vertical bull call spread at $8.80 or best
Opening Trade
11-23-2022
expiration date: December 16, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I think that Tesla has suffered enough.
All the new negatives are now in the price, the China lockdowns, the recalls, and recession fears are now in the price. At the end of the day, Tesla really is a consumer discretionary stock.
With this trade, I am willing to bet that the 200-week moving average at $160 will hold. I am also betting that a company that is growing at 50% a year will see its share price fall only 65% from its all-time high, which seems reasonable. If I am wrong, it is growing at a 40% rate.
Twitter will remain a distraction, but only so much of a distraction. A now $10 billion company can only drag down a former $365 billion company so much. Elon Musk has been chastised severely. It also helps that Citibank (C) upgraded the stock from a “SELL” to a “NEUTRAL”.
Tesla will remain the top EV maker for the foreseeable future.
This trade also converts our existing short position in Tesla to an option “short strangle”, not a bad idea when implied volatilities are trading at a sky-high 63%, triple the implied for the S&P 500 (SPY).
Therefore, I am buying the Tesla (TSLA) December 2022 $140-$150 in-the-money vertical bull call spread at $8.80 or best.
Don’t pay more than $9.30 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.
If you don’t do options, stand aside. This is a short-term options play only.
This is a bet that the Tesla (TSLA) will not trade below $150 by the December 16 option expiration day in 17 trading days.
Here are the specific trades you need to execute this position:
Buy 12 December 2022 (TSLA) $140 calls at……...….…$42.00
Sell short 12 December 2022 (TSLA) $150 calls at…….$33.20
Net Cost:………………………...............….……........….………$8.80
Potential Profit: $10.00 - $8.80 = $1.20
(12 X 100 X $1.20) = $1,440, or 13.64% in 17 trading days.
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.
