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) June 2023 $210-$220 in-the-money vertical bear put debit spread at $8.80 or best
Opening Trade
5-15-2023
expiration date: June 16, 2023
Portfolio weighting: 10% weighting
Number of Contracts = 12 contracts
I learned over the weekend that trader George Soros is bailing on his positions in Tesla and Rivian (RIVN). He doesn’t want to be in a sector that is undergoing a price war. George, ever the trader, and an early investor in my hedge fund, is looking to sell now and buy the stocks back cheaper.
We also have a small window here in that the implied volatility for Tesla options have just popped from 43% to 48%.
As much as I love Tesla for the long-term, the stock has an uphill battle as long as the price war continues for the short-term. With their sixth price cut this year, another $3,000 for the Model 3, the company aims to buy market share at the expense of current profits.
Therefore, I am buying the Tesla (TSLA) June 2023 $210-$220 in-the-money vertical bear put debit spread at $8.80 or best.
Do not pay more than $9.40 or the risk reward will no longer be favorable.
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.
With this trade, I am willing to bet 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:
Buy 12 June 2023 (TSLA) $220 puts at………….……….…$53.00
Sell short 12 June 2023 (TSLA) $210 puts at……………..$44.20
Net cost:………………………….……………..…...........…………$8.80
Potential Profit: $10.00 - $8.80 = $1.20
(12 X 100 X $1.20) = $1,440, or 13.63% in 24 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.
