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 2019 $360-$370 in-the-money vertical BEAR PUT spread at $8.60 up to $9.30
Opening Trade
10-30-2019
expiration date: December 20, 2019
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Tesla has just enjoyed a meteoric 55% rally off in a month. That puts the shares at the very top of a three-year range.
Everything is going right. It just announced only the third quarterly profit in the company’s history. Total production since inception is at an all-time high and will reach 900,000 by yearend. Both the Shanghai factory and the Model Y pickup truck are coming online sooner than expected.
What usually follows a spate of good news? Bad news.
Therefore, very short-term trading opportunities are opening up on the short side. Implied volatilities on the options are still sky-high, thanks to the recent extreme movements. The Mad Hedge Market Timing Index at 74 also begs for a compelling short position.
Therefore, I am buying the Tesla (TSLA) December 2019 $360-$370 in-the-money vertical BEAR PUT spread at $8.60 or best.
Don’t pay more than $9.30 or you’ll be chasing.
This is a bet that Tesla shares will not rise above the $360 strike price by the December 20 option expiration in 36 trading days. There is substantial resistance at short of the all-time high at $394.
If you don’t trade options, stand aside. This is a short-term options expiration play only.
Long term, I believe Tesla is still a ten bagger, eventually reaching $2,500 a share. But it won’t happen by December 20.
Here are the specific trades you need to execute to obtain a $10,000 position.
Buy 12 December 2019 (TSLA) $370 puts at………….………$61.00
Sell short 12 December 2019 (TSLA) $360 puts at………….$52.40
Net Cost:………………………….................………..………….….....$8.60
Potential Profit: $10.00 - $8.60 = $1.40
(12 X 100 X $1.40) = $1,680 or 16.27% in 36 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
You must be logged into your account to view the video.
Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
