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) – EXPIRATION AT MAX PROFIT
EXPIRATION OF the Tesla (TSLA) February 2023 $150-$160 in-the-money vertical bull call spread at $10.00
Closing Trade
2-17-2023
expiration date: February 17, 2023
Portfolio weighting: 10%
Number of Contracts = 12 contracts
We have the good fortune to have three options positions expiring at their maximum profit points at 4:00 PM today. So you don’t get overwhelmed by getting three trade alerts at once, I will start feeding them out now.
This position took advantage of a sky-high implied volatility for Tesla options at 92% which have since fallen sharply.
As a result, you get to take home $1,200, or 11.11% in 8 trading days.
Well done and on to the next trade.
You don’t have to do anything with this expiration.
Your broker will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning, February 21 because of the Presidents Day Holiday and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
Tesla shares plunged last year because Elon Musk sold an additional $3.6 billion worth of shares this month, bringing his total for the year to a mind-numbing $40 billion, according to SEC filings.
An onslaught of new Tesla positives will hit the market in 2023. The new Cybertruck comes out and there is a two-year waiting list out the gate and deposits in hand for 1.5 million vehicles.
The company is generating such enormous cash flows that it is like to carry out $10 billion in share buybacks, especially with the Price this low. There are no real competitors on the horizon, except for a handful with minimal production at big losses outside of China.
All the new negatives are now in the price, the China lockdowns, the product recalls, the Shanghai shutdown, recession fears, and even Elon Musk himself going from a premium to a discount are now in the price. At the end of the day, Tesla really is a consumer discretionary stock.
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. Soon he will appoint a new Twitter CEO who knows the social media industry cold and the distraction will go away.
Tesla will remain the top EV maker for the next decade easily.
This was a bet that Tesla (TSLA) would not trade below $165 by the February 17 option expiration day in 9 trading days.
Here is the specific accounting you need to close out this position:
EXPIRATION OF long 12 February 2023 (TSLA) $155 calls at……$46.61
EXPIRATION OF short 12 February 2023 (TSLA) $165 calls at….$36.61
Net Proceeds:………………………….………………….……..................…$10.00
Profit: $10.00 - $9.00 = $1.00
(12 X 100 X $1.00) = $1,200, or 11.11% in 8 trading days.
