Update: TSLA Earnings Call Calendar

by CC August 3, 2017 9:58 am • FREE ACCESS

Yesterday we detailed a defined risk bullish trade idea into Tesla (TSLA) earnings. Here was the trade idea and rationale:

Buy the TSLA ($319) Aug4th/ Sept 340 call calendar for $7
  • Sell 1 Aug4th 340 call at 3
  • Buy 1 Sept 340 call for 10

Breakeven/Rationale – The most that can be lost on the trade is $7. The trade does best with a move higher in the stock towards 340 (very near the implied move of 6.5%, or $20). A big move lower and the trade could essentially be worthless, but any sideways or move higher and it’s in good shape. If the stock does move higher, but below the 340 the short weekly calls will expire worthless, leaving a cheap Sept call for a continued move higher. If the stock moves substantially higher than 340 before this Friday there is risk that the trade is a loser, despite getting direction right. But the strike chosen is close to the implied move to the upside for the event.

After the post, TSLA moved higher into the close, and is up on the event this morning, about in line with the implied move (but now slightly higher than our strike due to that late day move higher into the event). With the stock 345 this trade is worth about 13.

With the potential for the stock to breakout here it makes sense to close this for a profit, the risk is if the stock keeps going higher the profits will trail off. This trade is nearly a double and worked well in targeting a move higher. There’s only about $2 in extrinsic premium left in the Aug4th calls, that means if the stock was here on Friday’s close the trade would be worth $2 more, but there’s also risk to lose more than that on a move above 350 so it makes sense to close:

Sell to close the TSLA (345) Aug4th/Sept 340 call calendar at 13 (for a $6 profit)