Is Tesla going to $400 or $200 next? If you know the answer to that question, you’re too close to the stock. Here’s how I’m trading it. (July 05, 2018)


Over at Option Market Mentor today we put on a bullish trade on Tesla ( NASDAQ: TSLA ). We’ve actually traded this both ways; Bridget, a while back, put on a bull put spread on Tesla ( NASDAQ: TSLA ). Then it came up here and I put on a bear call spread to ride this thing on the way down. And then just today we put on a bull put spread again. So this is a stock that we have been trading both ways. I guarantee you that trading of calls and puts, short positions on a stock like this because it is so volatile, is actually a lot more efficient than that tent assembly line that Elon is using. Sorry to offend all you “Teslonians”, I know we are saving the planet here.

The idea here is, Tesla ( NASDAQ: TSLA ) got sold off and I am sure you know all the reasons why. If you don’t just Google it, I am not going to go into detail here. But I am wondering, it is still Tesla ( NASDAQ: TSLA ), it is still kind of a religion so you could see where it is all across to board. The reason it is not up at $1000.00 is because it doesn’t deserve to be. The reason that it is not down to zero is because it doesn’t deserve to be, though they don’t make money.

There is a lot of short interest in the stock. And then at the same time a lot of bulls, you can look at Elon Musk’s Twitter feed and you will see fawning adulation all over the map, like this guy is really, really loved. He is the new messiah for a lot of people. That’s fine but because of that there are people that will stay in this stock until it is zero, through thick and thin. I couldn’t tell you whether the stock, at $309.00, what’s next, 400.00 or 200.00? I literally couldn’t tell you. And if you can, if you say, “Well Dan, of course it is going to be at 400.00. It will never go back to 200.00.” You’re too close to the stock.

On the other hand, if you say, “Dan, of course it is going to go 200.00, it’s never going to see 400.00. This pig is going to die.” You are too close to the stock. You have to trade the news, the way the stock reacts to the news. So if you put on this spread then keep it on. If you didn’t and you are an option trader, consider it. It is a wide spread but I think it works. If you are a stock trader, good for you. Typically, I hate to tell you option traders but if you are just trading stock over time, you are probably going to make more money because you are going to lose less.

If you are just trading stock here’s you trade on Tesla ( NASDAQ: TSLA ): The intraday high was 314.39. I am putting an alert at 314.50; buy more. If the stock hits 314.50 and it probably will tomorrow, I am going to buy some more stock and we will see how high this thing can go.

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