Could there be a bigger retracement since the stock is hitting the 850 level for 2 weeks now. Knocking on the door of heaven? But nobody is opening it! We all know Tesla has a lot of momentum and many think this stock grew too fast and is overpriced. I was waiting for a retreat, which was not coming. Is it time now?
Buying a PUT just out of the money is quite expensive. We all know TSLA can gain $50 a day and going down can be even steeper. When the panic sets in and all start selling!
Here is one scenario of many. Buy the 850 PUT EXP FEB26 for $77.70. One contract $7770 USD!
If TESLA drops by $15 you making about the half, 8 USD per contract. That would pocket a profit of $800 for the trade. That would give you a ROI of a bout 9.5%. Not too bad. If it dropped even further to 700, I have seen those drops and they are not very unlikely especially when there is such a huge and long uptrend!! A 50 dollar drop could generate 21 USD x 100 profit. Let see what happen. I will stay out. I dont want to put this huge amount on one trade. If I was trading with 100,00 USD, yes, maybe. But no thanks for now. Take the other side into consideration too: What if the stock breaks through to the upside??? :(
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