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) – TAKE PROFITS
SELL the Tesla (TSLA) May 2023 $110-$120 in-the-money vertical bull call debit spread at $9.95 or best
Closing Trade
5-5-2023
expiration date: March 17, 2023
Portfolio weighting: double 20%
Number of Contracts = 25 contracts
I am going to use the ballistic move up in Tesla (TSLA) shares and the markets and the collapse in the Volatility Index ($VIX) to take profits in my Tesla long.
With 95.83% of the maximum potential profit in hand the risk/reward of carrying the position for two more weeks is no longer favorable.
As my late mentor taught me, “Always leave the last 5 cents of a move for the next guy.”
Therefore, I am selling the Tesla (TSLA) May 2023 $110-$120 in-the-money vertical bull call debit spread at $8.80 or best
As a result, you get to take home $2,875, or 13.64% in 10 trading days. Well done and on to the next trade.
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 lower your offer by 5 cents with a second order.
After markets have big moves like we saw in January, you tend to get no moves for a couple of months. Too much performance and market action was pulled forward in January.
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.
Tesla will remain the top EV maker for the next decade easily.
This was a bet that the Tesla (TSLA) would not trade below $140 by the May 19 option expiration day in 19 trading days.
Here are the specific trades you need to close out this position:
Sell 25 May 2023 (TSLA) $130 calls at………….......………..…$60.00
Buy to cover short 25 May 2023 (TSLA) $140 calls at…...….$50.05
Net Proceeds:……………….….................……….……………………$9.95
Profit: $9.95 - $8.80 = $1.15
(25 X 100 X $1.15) = $2,875, or 13.64% in 10 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.