$TSLA making some volatile moves

$TSLA making some volatile moves

I don’t know if it is a conscious thing or not but Elon Musk might be the second most influential Tweeter on the planet save for the current President.  Maybe Musk wants to be number 1.  When a CEO says he wants to buy out his company for $400+ per share he is squeezing someone.  And right now Musk is squeezing the $TSLA short sellers.

In our Gold and Platinum series at Option Pit, we try to teach our students how to buy options.  Not just the “I think $AAPL is going up” call buy but really buying realized volatility in a stock.  It is good to buy options  in a stock that we think is going to move but it is better to buy options in a stock that is for sure going to move.  $TSLA feels like it needs to keep moving.

Charts by CBOE Livevol Pro

From the earnings call to the current $TWTR blast, Musk has talked up the great potential and with the short interest that is enough to get some short covering going.  Not much has changed since the $300 pre-earnings number.  $TSLA was up $40 today on the fact that the CEO could scrape up 60 billion dollars to buy the stock he does not own.  We now have several price areas in the short term which are the upside $400< buyout level, retrace the $40 dollar move today, and the $300 level that existed when $TSLA was a car company trying to be profitable.

That creates possible prices, any of which can happen in a week.  The least likely seems to be a buyout but we can just cap the risk around $400 and the most likely seems to be a retrace down $40 or more if the buyout is just another Tweet in a string of Tweets.  Hard to imagine TSLA staying here.

We will cover this setup in our Gold Open Mic.  A sample of our Gold content is here.

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Disclosure Positions in $TSLA, $TWTR, $AAPL

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