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) – SELL - STOP LOSS
SELL the Tesla (TSLA) June 2023 $210-$220 in-the-money vertical bear put debit spread at $6.20 or best
Closing Trade – Not for new subscribers
6-2-2023
expiration date: June 16, 2023
Portfolio weighting: 10% weighting
Number of Contracts = 12 contracts
As much as it pains me to do so, I am sticking to my rigid stop-loss discipline and selling my short position in Tesla. This is the first time I have lost money on a trade since March 7.
We have monster profits to protect, and the math sharply turns against us with this position when we cross the nearest strike price, especially with the June 16 option expiration 11 trading days off.
It was Tesla’s announcement of the deal with Ford Motors (F) allowing their cars access to Tesla’s charging network that triggered the $30 rise in the stock in a week.
I have known about the profit potential of a national charging network for Tesla for a decade, eventually making it the world’s largest electric power utility. It seems everyone else just learned of it on Thursday.
I reiterate my medium-term target for Tesla shares of $1,000 and long-term at $10,000.
All of you also own the Tesla (TSLA) June 2023 $120-$130 in-the-money vertical bull call debit spread, which I relied on to partially hedge the short and expires at max profit in ten trading days. This will knock a welcome $1,440 off of the loss on the put spread, reducing the net loss to only $1,680.
Most of you also hold Tesla shares and LEAPS as a core long and are probably popping champagne bottles and planning expensive summer vacations after seeing (TSLA) cross $210 for the first time since February.
Therefore, I am selling the Tesla (TSLA) June 2023 $210-$220 in-the-money vertical bear put debit spread at $6.20 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 lower your offer by 10 cents with a second order.
With this trade, I was willing to bet, erroneously so, that Tesla shares would not rise above $210 by the June 16 option expiration in 24 trading days.
Here are the specific trades you need to close out this position:
Sell 12 June 2023 (TSLA) $220 puts at……………..............…….…$13.00
Buy to cover short 12 June 2023 (TSLA) $210 puts at……………..$6.80
Net Proceeds:………………………….………................……..……………$6.20
Loss: $8.80 - $6.20 = -$2.60
(12 X 100 X $2.60) = $3,120.
That Hurt!
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.
