$TSLA bearish trade idea 28 feb

 

28 feb

investor day happening on 28feb after market.. a trade idea the market reacts poorly.. 

stock is 207ish after hours on 27th.. the stock hit a low of about 187 on the 13th of Feb so will go with the assumption that stock works its way lower to test that level. Going to use a 1x2 Put Ratio Spread. buy 1 Put, sell 2 Puts lower.. will need buying power for that 2nd Put... 

MAR 200/185 1x2 Put spread for .50 debit - buy one 200, sell two 185s

profit range at MAR monthly opex is 200-160. Consider it like selling a 185 Put but buying a Put spread to profit on the move to 185 .. a perfect on the nuts pin at 185 at opex is $1500 profit per 1x2. the two 185's will need to decay away to see the profits so plan on holding to the last day or two. If the stock takes off, monitor this position because you may be able to close for a credit as the 185s decay quicker.. you can then reestablish this trade higher for a hedge or just move on.

if stock is under 185 at opex you will be "put the stock" at 185.. you will buy 100shares at 185.. but you should close this trade out regardless on opex day.

i will be reviewing this to put on myself before market close on 28th prior to investor day.. i like that $40 range for a hedge to downside (in addition to my weekly short calls). my intent is to enter ratio spreads for near zero or slight credit, so you can make the ratio wider.. say the 200/150 but it will cost more. close to zero is just my method. chose strikes youre comfortable with. if you use weekly options you will not be able to have an as wide spread (and be near zero cost) , which why i went to MAR monthly .. again since its March, you will need to wait till near opex to see those profits, will likely be mark to market loss till then. patience, let the hedge work for you