timwest
Long

Tesla Motors - TSLA - Daily - Strangle Option Trade

NASDAQ:TSLA   TESLA MTRS INC
In preparation for the upcoming earnings report, Tesla             has some clear probabilities in front of it, from my perspective. If they report a great number and forecast, it will be $250 in a heart-beat. If they stumble at all in any way, it will be $150 in a heart-beat. So I view owning both puts and calls here as the best strategy. Buy the $210 calls and Buy the $185 puts for less than $15 (Feb 20 185 puts are $5, Feb 20 210 calls are $7 for a total of $12 currently) and exit the position at $40, $45 and $50. Risk a drop of $7. So you stand to either make $30+ or lose $7 per option (Options represent 100 shares of stock , so the smallest risk here is $700 for one strangle). Risk a maximum of 1% of your trading capital if the stop loss is hit.

IF TSLA             gaps down anywhere near $150, then I would highly recommend going LONG with a $120 stop and a $200 target. Risk $30 to make $50. Exit puts IMMEDIATELY at the first touch of $150 and buy stock to get long. The options will likely be too expensive to buy, so if anything, I'd consider selling the $150 puts to get long TSLA             at $150.

Why am I publishing this now since earnings are so far off? Because I feel strongly about this trade now and think this is a reasonable risk/reward and if oil             rallies back up, then TSLA             will lift now. If oil             melts down further, then TSLA             will sink. If Oil             holds steady AND TSLA             has a great forecast for Model-X, then TSLA             will skyrocket. I think it is safe to bet AGAINST TSLA             staying at this price over the longer term when a YEAR AGO I thought TSLA             was a good bet to go sideways. (See previous forecasts).

OH - And we need a new button here at Tradingview to click on BOTH "LONG" and "SHORT".... I'll choose LONG just because I'm cheering for TSLA             , but I don't want to have my comment be considered NEUTRAL!

Cheers.

Tim 12:50PM EST Friday, January 23, 2015
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Interesting, I like the approach, will consider it.
+2 Reply
Awesome, thank you very much for the update on Tesla. Reading it...
+1 Reply
TreborDone
2 years ago
Target 214 USD < 6 february
Reply
I agree Tesla isn't staying where it is. I'm short this one over the long haul even though I agree it could have one more good pop upward.
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Nice analysis. Good luck on the trade. It is a solid stock to trade in any non-neutral direction.
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Mr DL
2 years ago
I'm long! UP UP!
Reply
santoshtejas
2 years ago
As the tesla earning on third week of feb, can we sell the put and call further OTM for 2n week of feb to reduce the cost of the trade?
Reply
AshYo
2 years ago
Nice analysis, what is the target on this rally?
Reply
Man, I am impressed of your way/ability to describe complex ideas visually ....
+1 Reply
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