Medium term
Trade view / 19 August 2016 at 7:58 GMT

Tesla could be running out of power

Product Manager, Options Trader, Educator
Price target:
Market price:

The shares of electric vehicle maker seem to be stuck in the rut with strong resistance near $236. On August 1 shares failed to break above this level and have slowly drifted down to current levels of $222. We see further pressure over the next few weeks especially as earnings are out and the merger with Solar City is a fact now. 

Markets have been relatively quiet especially in the US where the Fed seems to be split and many traders are still on a holiday that could extend with Labor Day. 

TSLA Daily

Source: Saxo Bank. Create your own charts with SaxoTraderGO click here to learn more

Management and risk description
For this short-term bearish trade we initiate a 10 point-wide vertical put spread

Underlying Price $223.51

Buy 1 23 September 16 225 Put for $11.90
Sell 1 23 September 16 215 Put for $  6.15   (*as of the close last night) 35 days
Net Debit (money you pay)      $5.75

Breakeven  = 225-5.75=219.25
Max Gain = 10 - 5.75= 4.25
Max Loss = 5.75
ROR= 74%
*above calculations at expiration
Entry: today

Stop:  no stop

Target: 2-3 weeks out

Time horizon: exit week the of expiration or when 80% of max gain achieved

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more


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