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Trade Details: Bought to open 1 Jun 16th Tesla Inc (NASDAQ:TSLA) 285 put for $4.90, $495.49 total cost (99.1% of account), 40 days to go. The trade executed at 15:32:14 when the stock was approximately $307.15.
Potential: I am targeting the two gaps and the 0.618 fib retracement level on the daily chart, just above the 267.55 level (a long-term resistance now support level). This trade anticipates Tesla stock will test these levels toward the end of this month, about half way through the option's duration. A spectral analysis sets my sell limit price at $12, paired with a conditional stop order 20% below my purchase price, at $3.90.
Thesis: Top down... A bearish bias based on several factors: the low VIX provides a contrarian indicator, potential for seasonal market weakness, markets' failure to advance following the French election, lower oil and skittish candlesticks (several doji followed by a hanging man on Thursday) on the SPY daily chart. XLK is extending but decelerating. Will top heavy leadership from AAPL, AMZN and NFLX (rolling over) reverse?
With Tesla technicals and levels presented above, will the market become sensitive to the expenses/financing story, or will Musk be given the Bezos pass (i.e. a great entrepreneur given a pass to grow revenues rapidly without punishment for being unprofitable)? That fundamental argument is certainly beyond the duration of this trade, but it factors into short-term sentiment.
Note: Here's the other trade (JPM Long) I was considering today: https://www.tradingview.com/chart/JPM/juVeWPNc-Bullish-Symmetrical-Triangle/