Tesla, Inc. (TSLA:NASDAQ)
Price at Preparation: $240.45 (Jan 08, 2024)
Welcome to another edition of Top Pick Tuesdays! This week, we’re setting our sights on an electrifying opportunity in the electric vehicle market with Tesla, Inc. (TSLA). As the company continues to innovate and dominate headlines, we’re zoning in on a specific options strategy that could spark significant gains for savvy investors.
Tesla’s Current Trajectory
Tesla has been a standout in the EV industry, constantly pushing the boundaries of technology and sustainability. However, even market leaders like Tesla aren’t immune to market fluctuations. This is where our strategy comes into play.
Technical Analysis and Strategy
Our analysis has identified a major support area for TSLA around $228.36. This level is crucial as it has historically acted as a springboard for the stock, indicating strong buying interest. Despite a recent period of consolidation, our confidence in Tesla under the $215 mark remains high.
We’re targeting the 215 put option for the March expiration. By selling this put, we can expect a credit of $1,560.00 per option, with less than 50% margin required for deposit. This approach not only capitalizes on Tesla’s current market position but also aligns with a more conservative risk profile.
The Cash-Secured Put Strategy
In this strategy, we’re utilizing cash-secured puts. This means we’re prepared to buy the stock at the strike price if it’s assigned, using cash set aside for this purpose. With an average fill of $7.80 per option, our assignment price would be $207.20. This price not only gives us a favorable entry point into Tesla but also keeps our investment within a manageable range.
Risk Considerations
As with any investment strategy, there are risks involved. The primary risk here is that Tesla’s stock could fall significantly below our strike price, potentially leading to losses. However, given Tesla’s strong market position and our analysis of support levels, we believe this is a calculated risk worth taking.
Conclusion
Tesla’s innovative edge and market presence make it a compelling choice for this week’s top pick. By employing a cash-secured put strategy, we’re looking to capitalize on Tesla’s potential while maintaining a level of safety. Remember, options trading isn’t for everyone and comes with its own set of risks, so ensure this strategy aligns with your investment goals and risk tolerance.
CHART (click to see image)
Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.
