DailyPlay – Closing Trade (TSLA) – June 10, 2022

TSLA: 7.27% Gain: Buy to Close 2 Contracts June 24, 2022 $695/$675 Put Verticals @ $7.02 Debit. DailyPlay Portfolio: By Closing 2 Contracts, we will be paying $1404. 

Investment Rationale

Yesterday we told you that the SPX’s 8-day sideways tight range was likely going to resolve itself by Friday’s close, and Thursday’s market drubbing seems to have answered the question of which way the market would move from the past two weeks of back and forth restrained action.

Without an immediate move back up to north of 4100 (I’m thinking by today or Monday), the picture again gets dicey for bulls, especially with the weekly cloud bottom having been right by the high the past three weeks in a row (Moreover, the weekly Conversion Line caught this week’s high, adding to the bulls’ not showing us that they have the strength to change this bearish 2022 market around.)

Earlier this week, we perfectly sold a June 24th TSLA $695/$675 put spread. Yesterday, that put spread was worth half of what we sold it for (giving us a 50% gain) when TSLA was at its high, which you’ll see was just near the top of its Value Area (the top of the yellow zone) that I had highlighted on Tuesday. That’s all she rode as the big market decline had this then give back all daily gains and close it right near its low of the day.

TSLA – Daily

Given the close beneath its Conversion Line and rejection of the High-Value Area, we’d be smart to cover half this trade today. If in the next few days (including today) its mid-price gets back down to the price we sold it at on Tuesday, we’ll cover the rest and kiss goodbye to what was a solid trade out of the starting gate. (A perfect example of “the market giveth and taketh”.)

P.S. Until we have the technology set up to send you intraday phone text alerts, I’ll recommend that when you see a trade make 50% in 48 hours, you take it regardless of if an alert comes out or not. This market moves too quickly to always wait for new daily updates, especially if it’s a counter-trend trade like this one was.

– Rick Bensignor
Chief Market Strategist