TSLA- Option Trade

As I'm sure you've figured out, Mike an I like to trade a few options strategies in addition to long stock.   I find that  keeping a few options strategies in your play-book helps to keep you engaged in times like these, when it's hard to find stocks that meet all your rules to go long.   I actually prefer certain option stagnates to trading long stock.  

​Today Chaikin Analytics  gave us an "Overbought Sell" signal in $TSLA.  

Tesla has rallied off a bottom, although it's rallied with negative money flow, poor relative strength, and a Very Bearish Power gauge rating.   The stock is also overbought after a pretty big move.  

When you look at a long-term ( wk/3yr) chart, there seems to be a pretty decent line in the sand right around the $190 level.    When we looked at the option chain,  standard March options are trading with around 56% IV, which is pretty juicy considering earnings are behind it.   

There is only on thing that waved a red flag, entering a bearish trade..... 

Insiders have been accumulating the stock.  As we all know, insiders sell for a number of reasons.... but generally only  put their own money to work in the stock for one reason! 

That said, I still decided that the preponderance of the evidence was TSLA  looks lover extended  after a decent rally, in the face of cheaper oil and a generally volatile market.  

​ So, I entered a Bear Call Spread.  That's where we sell one call and then sell another call further out of the money to define our risk.  i sold the MAR  195/197.50  call spread and collected .75 per contract.    I will look to close this trade for about .35 as soon as I can.   

Of course, after I filled this order TSLA rallied right up to the $187 level I identified as long term support/resistance on decent volume.... luckily I have 22 more days for the trade to work out for me.   I'll keep you posted on this trade. 

Happy Trading! 

​AA