TSLA – 07/07/2016
Another one of the momentum based trades that I placed with 24 hours until expiration. This one looked like a really strong candidate and I was able to sell Puts a pretty good distance from the current price of $216.75 because of high volatility. Of course, with TSLA you never know what news event might take place over night that would completely blow you out of the water. That is a risk you take with these stocks as well as many short term momentum trades. I had support at both the 7 and 21 day moving average entering the trade which was good as well as my momentum indicator showing continuation of the uptrend.
I sold the July week 2 $207.50 Put for $0.38 and purchased the July week 2 $202.50 Put to cover it. I could have made more money by selling the Put at $210.00 (or higher) but I got the premium I was looking for at $207.50, so why take the risk? The stock performed well right out of the gate the next day starting with a gap up with a high of $219.95 and a low of $214.50 on the daily bar. My $207.50 short was never in any danger. This trade performed perfectly. My total risk was $4,620.00. I made $200.00 before commissions with was about 4.3% in one day.