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) February 2023 $150-$160 in-the-money vertical bull call spread at $9.20 or best
Opening Trade
2-6-2023
expiration date: February 17, 2023
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Incredible as it may seem, these strike prices are $80 higher than when we last bought Tesla one month ago.
But with a sky-high implied volatility of 74%, Tesla options are the most tradable in the market. In addition, this long is hedge by short positions $16 high that also expire in nine days.
Therefore, I am buying the Tesla (TSLA) February 2023 $150-$160 in-the-money vertical bull call spread at $9.20 or best.
Don’t pay more than $9.50 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, buy the stock on a bigger dip. Even if the (SPY) revisits its 2022 low at $355, I doubt that Tesla falls much from here.
Call spreads this far in the money trade all over the map but give this your best shot.
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.
To make this trade really perfect, I would love to see the Volatility Index (VIX) well above the current $17. But Tesla implied volatility is already trading at a sky-high 74%, triple the market volatility. But you have to strike while the iron is hot. Tesla trades in its own world anyway.
This is a bet that Tesla (TSLA) will not trade below $160 by the February 17 option expiration day in 9 trading days.
Here are the specific trades you need to execute this position:
Buy 12 February 2023 (TSLA) $150 calls at……...….…$45.00
Sell short 12 February 2023 (TSLA) $160 calls at…….$35.80
Net Cost:……….......………………….…..............…….………$9.20
Potential Profit: $10.00 - $9.20 = $0.80
(12 X 100 X $0.80) = $960, or 8.69% in 9 trading days.
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.
