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 2025 $540-$550 in-the-money vertical bear put debit spread at $10.00
Closing Trade
2-21-2025
expiration date: February 21, 2025
Portfolio weighting: 10% weighting
Number of Contracts = 12 contracts
I am sending this trade alert out early so I don’t overwhelm you with too many alerts at the Friday, February 21 close.
In retrospect, this seems like an insanely cautious trade. Not many people were willing to bet that Tesla shows would go down at the end of January.
Since I sent out this trade alert on January 22, Tesla shares have fallen by a gobsmacking $120, or 28%. Tesla’s worldwide sales are in free fall, and the stock market has noticed.
As a result, you get to take home $1,440 or 13.64% in 22 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 24, and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service. The flight of money right now is from small, undercapitalized, and questionable to large, overcapitalized, and rock-solid balance sheets.
In a dull market like this one, you have to go for the highest volatility names to earn your crust of bread. That would be Tesla, which is sporting a sky-high 75% implied volatility when we put out this trade, far and away the highest of any major name in the market. Buying with the Mad Hedge Market Timing Index at a lowly 28 was also pretty attractive and low risk.
With this trade, I was willing to bet that Tesla shares would not rise above $540 by the February 21 option expiration in 22 trading days.
Here is the specific accounting you need to close out this position:
Expiration 12 February 2025 (TSLA) $550 puts at……........….…$194.95
Expiration of short 12 February 2025 (TSLA) $540 puts at…….$184.95
Net Proceeds:………………….……….…...............................…………$10.00
Profit: $10.00 - $8.80 = $1.20
(12 X 100 X $1.20) = $1,440 or 13.64% in 22 trading days
