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.
Tech Alert - Tesla, Inc. (TSLA) – BUY
BUY Tesla, Inc. (TSLA) May 2022 $690-$720 in-the-money vertical BULL CALL spread at $25.00
Opening Trade
4-26-2022
expiration date: May 20, 2022
Portfolio weighting: 10%
Number of Contracts = 4 contracts
This is a tactical trade in Tesla (TSLA) that the underlying TSLA stock will stay above $720 in the next 24 days.
We got a more than 11% selloff in TSLA shares this morning and the stock is down from $1,100 high in January.
The stock has been whipsawing as news dinks and dunks in that Founder and CEO of Tesla Elon Musk will pledge $63 billion of his Tesla shares to secure funding for his Twitter purchase.
The stock is down as this raises the level of debt servicing that Tesla founder is responsible for and could result in him burning Tesla shares to cover the interest and principal payments to Wall Street financiers. These banks don’t do these deals for free.
I understand the Nasdaq market is deteriorating and the tech portfolio has 2 short Chinese tech bear put spreads, but this is more about positioning as the negative TSLA news is baked into the price and is a solid hedge for our short positions after taking profits on BABA.
Here are the specific trades you need to execute this position:
Buy 4 May 2022 (TSLA) $690 calsl at………….………$209.00
Sell short 4 May 2022 (TSLA) $720 calls at………….$184.00
Net Cost:……………………..…….………..….............….....$25.00
Potential Profit: $30 - $25 = $5
(4 X 100 X $5) = $2,000 or 20.00% in 25 days
If you are uncertain on 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.
