On Friday’s Options Action on CNBC I detailed a new trade idea in Tesla ($TSLA), a put butterfly to express a near term bearish view on what I believe is waning momentum in the stock and a rapidly deteriorating technical set up in front of potential fundamental headwinds in 2015.
New Trade – $TSLA: Charging Violation
TSLA trade idea From CNBC’s Options Action Friday Jan 2nd, 2015:
TRADE – Buy the TSLA ($217.50) Feb 210/180/150 put fly for $5.00
– Buy 1 Feb 210 put for $11.00
– Sell 2 Feb 180 puts at $3.50 each for a of $7.00 total
– Buy 1 Feb 150 put for $1.00
Breakevens on Feb expiration:
-Gains of up to $25 between $205 and $155 with max gain of $25 at $180.
-Losses of up to $5 between 205 & 210 and between 155 & 150, max loss of $5 above $210 and below $150
Rationale: This is a fairly inexpensive way to take a shot on the short side on TSLA starting off the new year with selling pressure. $180 seems like the level to target on a break of the $200 level as $180 was about the May low.
For more detail, read here