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) December 2022 $225-$230 in-the-money vertical bear put spread at $4.35 or best
Opening Trade
11-21-2022
expiration date: December 16, 2022
Portfolio weighting: 10%
Number of Contracts = 25 contracts
When it rains, it pours.
The announcement this morning that Tesla was recalling 321,000 vehicles over a tail light issue hit the stock across the face with a wet kipper.
The Twitter acquisition continues to weigh on Tesla stock like a lead weight, unfairly so, but never argue with Mr. Market.
At Morgan Stanley, they said your assets go down the elevator every night and that is true at Twitter as well. Right now, the assets are leaving in droves, imploding the company before our very eyes.
Tesla is also still joined at the hip with the rest of big tech, which is still in the penalty box every time interest rates rise.
As much as I love Tesla for the long term, for the next 19 trading days until the December 16 options expiration, I think it will trade sideways at best and down at worst. At the very least, you can use this trade to hedge existing Tesla longs.
Therefore, I am buying the Tesla (TSLA) December 2022 $225-$230 in-the-money vertical bear put spread at $4.35 or best.
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.
Don’t pay more than $4.60 or you will be chasing.
If you don’t do options, stand aside. This is a short-term options play only.
This is a bet that the Tesla (TSLA) will not trade above $225 by the December 16 options expiration day in 19 trading days.
Here are the specific trades you need to execute this position:
Buy 25 December 2022 (TSLA) $230 puts at……...….…$59.00
Sell short 25 December 2022 (TSLA) $225 puts at…….$54.65
Net Cost:……………………….......................….……….………$4.35
Potential Profit: $5.00 - $4.35 = $0.65
(25 X 100 X $0.65) = $1,625, or 14.95% in 19 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.
