TSLA

We bought some vertical bull spreads targeted on the 300 strike quite a while ago, subsequently rolling them to give us the position for a net credit of 1.13.  The long side used calls with a Nov 22 expiration that could conceivably be back in play, but I'll wait to hear from subscribers before I attempt to revive the position. At the moment, the rally begun last Wednesday from 235.65 looks bound for a minimum 262.54 (see inset).  This implies that the pullback to its midpoint pivot sibling at 253.95 is buy-able, either via camouflage or with a 'mechanical' stop-loss of about 2.80. If you choose the latter, I'd suggest holding the position to a single round lot.  _______ UPDATE (12:25 p.m. EDT):  The stock has vaulted $7 in the early going, most of it on the opening bar, to trade at a so-far high of 262.49 -- a nickel from my target.  As a practical matter, no one could have gotten long, which is exactly what Mr Market intended.  However, I am still trying to determine how many subscribers may have been long to begin with via the vertical bull spreads we did earlier. We'd given them up for dead after building into them a guaranteed profit of $113 per spread. _______ UPDATE (October 9, 2:40 p.m.):  Unable to pry loose a response from subscribers, I am "de-listing" this tout. Rolling the spread foward as recommended would have produced an additional 0.80 of profit per spread, regardless of what the stock does.

Tesla’s strong rally has turned the Oct 3/Sep 5 calendar spread into a solid winner. The spread is currently trading on a bid/asked of 4.50/5.07.  This means subscribers who bought the spread for as little as $1.00 last week could have quintupled their stake. The most paid for it would have been about 1.54. In any case, I'll suggest offering half of the eight spreads to close today for 4.70. We'll plan on rolling what's left on Friday by covering (buying) back the September 5 300 calls we're short and shorting the Sep 12 300 calls at the same time. ______ UPDATE (10:40 p.m. EDT): The stock's push to an intraday high at 291.42 made the spread an easy sale for $5.00+, so I'll consider the order filled.  Now, roll the four spreads that remain into the October 3 /September 12 calendar as detailed above. _______ UPDATE (Sep 7, 10:31 p.m.): The midway price on the spread intraday was 2.30. Imputing the premium to the four October 3/September 12 calendar spreads we now hold would zero out the initial cost of 1.54 and add 0.76 to the real-time value of the spread.  We'll plan on rolling the spread again on Friday by selling the September 19/September 12 call spread (and thereby covering the short Sep 12 300s), but for now do nothing further. _______ UPDATE (Sep 15, 12:54 a.m.): I'll use a 0.37 price, midway between the intraday high and low, as the spread price unless I hear from someone in the chat room who did better or worse. Imputing this new premium income to our Nov 22 / Sep 20 spread gives us a CREDIT cost basis of 1.13, for a guaranteed minimum profit on the position of $452. That would be in addition to whatever the Nov 22

Tesla's bullish rampage looks like it could hit 305.55 on the next big thrust.  Accordingly, I'll recommend bidding 1.54 for the October 3/Sep 5  300 calendar spread 8 times, good till Friday. You should adjust your bid by 0.05 up or down for every 50 cents the stock moves above or below 262.50.  Please note as well that a pullback to the red line, a Hidden Pivot midpoint at 241.39, should be regarded as a buying opportunity, especially the calendar spread (albeit it at a much lower price). _______ UPDATE (August 26, 11:43 p.m. EDT):  Volatility has gotten crushed, and so you're doing well if you buy the spread now for 1.34 (with TSLA at 262.00).  Since the spread price can fluctuate wildly from one day to the next, I'll suggest that you recalibrate it hourly if you're a buyer, using a spread price midway between bid and offer as "fair value."  It has a delta value of around 9 at the moment, so you should adjust your bid for the spread by 0.01 for each 0.11 move in the underlying. _______ UPDATE (August 28, 9:45 p.m.):  With the Sep 5 calls melting away, the fair price for our spread must be recalculated several times daily by anyone seeking to buy it. It was a decent buy at Thursday's close for around 1.20, but it could shed yet another 0.15-0.25 as the week ends.

Let's make a mental note to buy the stock whenever it sells off hard for a couple of months, as it does every once in a while, since the powerful rebounds that have invariably followed are becoming as likely as tomorrow's sunrise. The next such opportunity should come after TSLA hits the 304.24 target shown, but traders should position from the long side in the meantime while the 17% rally unfolds.  I expect the pullback from 304.24 to be precise, based on the way buyers interacted with the 240.40 midpoint Hidden Pivot.  A pullback to that number should be regarded as a gift to buyers who are not onboard already.

On Wednesday, a chat room denizen suggested using options to take a shot in Telsa ahead of earnings due out after the close.  Turns out the company beat the Street estimate of 0.10 per share by 20%. The stock plummeted anyway, falling $24 to an intraday low of $178.  Go figure. Now take a guess how much you would have made if you had bought a bunch of out-of-the-money strangles the day before.  A big-odds bet with the stock trading for around $201 might have entailed paying $3.50 for some May 9 220 calls and $2.75 for 180 puts at the close on Wednesday, for a total of $6.25.  How could you lose, right?  In fact, you would have lost your shirt, since, even though the puts were $2 in-the-money at the final bell, the strangle was valued at 3.57, having traded no higher than 4.20 intraday. Ahhh, time decay! The Eighth Wonder of the Financial World. And don't think you would have done much better if you'd paid up for a strangle that was not so far out-of-the-money. For instance, if you had bought 190/210 strangles for $12.30 on Wednesday's closing marks, you would have been out 0.30 per strangle at the bell. That's because the calls fell from $6.56 to 0.05, while the puts gained only $5.96 -- not nearly enough to offset the time premium they shed as they went deep-in-the-money a day before expiration. And get this:  Even the $200 straddle would have been a loser.  If you had bought it for $21.00 at Wednesday's close, you would have made a whopping 0.53 on each straddle, since it settled at $21.53. But you'd have risked 40 times that initially, or $2100 --not exactly great odds. There are a couple of lessons to take away from this. 

When we  last looked in on this stock it appeared bound for a minimum 276.96. I'm going to revise that to 287.97, based on the monthly-chart pattern shown. I don't consider that a likely place for a bull market top, just a weigh station en route to who-knows-how-high.  The daily chart has been in a consolidation for two weeks and can be bought with a tight stop-loss on a pullback to 233.09 (60m, a=261.90 on 2/26). I've set a screen alert just above that price and will provide more-detailed guidance if and when the time comes. _______ UPDATE (March 11 , 8:05 p.m. EDT): The 225.86 target looks enticing for bottom-fishing (see inset, a new chart), so I'll recommend doing so with a 225.89 bid, stop 225.79. I am not suggesting using options because they are priced in the stratosphere, but if you'd rather buy calls than stock, try to hold the initial risk down to no more than 0.15  per contract with a tight stop-loss. The 287.97 target given above remains valid. _______ UPDATE (March 17, 1:33 a.m. EDT): There are no corrective patterns clear enough to warrant bottom-fishing with a straight bid and a tight stop-loss, but you could attempt it using camouflage at the 220.75 target shown, or at 218.10 if any lower. _______ UPDATE (March 20): The stock continues to flag lower, presumably developing thrust for the next rally.  Given the extremely steep pitch of the move that took TSLA to an all-time high at 265 (see inset), the correction may take another week or two to play out. _______ UPDATE (March 26, 8:26 p.m.):  The selling looks likely to continue to at least 198.07, or perhaps 195.77 if any lower (see inset), assuming it breaches a 1211.41 midpoint support that contained the bearish tide yesterday. 

Until yesterday, this stock was the obedient slave of Hidden Pivots, rallying over several weeks to within 21 cents of our longstanding target at 205.79.  That changed after Wednesday's close, however, when the stock took a manic leap to $225 (see inset) on word that Q4 earnings of 33 cents per share had beaten the usual suspects' estimates by a dime. We should probably be thrilled to see the shares of a company that makes actual products in an actual factory do well relative to companies like Facebook and Netflix, which add little or nothing tangible to the economy. Still, one can only shake one's head and wonder whether the 400% appreciation in TSLA shares over the past twelve months is a tad overdone. Be that as it may, we are obliged to identify a new target now that the old one has been demolished. The weekly chart offers one at 222.35 that is tied to an 88 low made back in June.  Since that number, too, has been exceeded this evening, albeit by only a few dollars, there must be a still-bigger bullish pattern at work. Although there are no clear beginnings to define one, we can still use a tiny, single-bar low at 33.80 recorded last March as the point of origination (aka 'A').  Accordingly, our new target is 276.96, using these coordinates from the weekly chart (see inset): A=33.80; B=194.50 on 10/4; and C=116.10 on 11/29.  The midpoint pivot of this pattern lies at 196.53, and so any pullback to that number should be regarded as a buying opportunity.  Because our point 'A' is not of the highest pedigree, 'camouflage' is an absolute must when bottom-fishing. ________ UPDATE (February 26, 12:48 a.m. EST): And now we have something to explain why TSLA has been making its way

The whack-jobs are back!  Tesla shares exploded to 162 on Tuesday for a nearly 20% gain. After that kind of performance, who even remembers why the stock got pounded down to 116 in November?  Bulls should be careful just the same, since all it would take for some crook to manipulate this stock into a steep dive is a YouTube video of flames shooting out from under some Tesla hood. It’s been a while since that has happened, and that could explain why DaBoyz decided it was time to goose the stock. Notice, however,  that the short squeeze, vicious as it was, failed to propel TSLA much past the midpoint pivot at 160.95. The actual high occurred $1.05 above the resistance, but that’s not quite enough of an overshoot for us to assume that a run-up to its ‘D’ sibling at 205.79 is a done deal.  However, if the stock were to close for two consecutive days above 160.95, I’d infer that a cruise to the higher number is no worse than an even-odds bet. _______ UPDATE (February 10):  The stocks deft handlers -- racketeers and erstwhile child molesters with Ivy League credentials -- have jacked up the stock by $14 today on who-cares-what-news, punching it to $189 on an opening-bar short-squeeze.  The so-far high at 199.30 leaves little ground to be covered to achieve the 205.79 target flagged here nearly a month ago, when the stock was trading nearly $40 lower.  One thing's for certain:  When DaSleazeballs have found the optimal price at which to dump stock into the eager hands of widows, pensioners and orphans, we can expect news of yet another flaming Tesla to trigger a precipitous dive and a new cycle of accumulation.

Tesla's plunge yesterday overshot a Hidden Pivot target, implying there is more selling to come. The ostensible reason for the selloff was a YouTube video posted on the web that showed a Tesla sedan in flames following an accident in Seattle. If regulators were to discover that the person who posted the video had shorted the stock it would raise some interesting legal questions, especially if it turns out that the fire was staged. If you are criminally inclined, and knew how put options work, you might be asking yourself why you didn't think of doing this yourself, since it triggered an avalanche in a grotesquely overbought stock that was ready to fall.  For your information, weekly October 175  puts purchased for 0.35 the day before would have quintupled your money in mere hours. _______ UPDATE (November 27): I posted a $91 target in the chat room a while back when the stock was trading above $140. It now looks like TSLA will fall to at least $96.31 before it finds traction, but $88.95 is possible if that Hidden Pivot fails.