Submitted by mytendies t3_y8ehch in wallstreetbets
Well there it is guys, the end of the great bull run of October 14th.
First let's do Tesla.
Tesla needed to be perfect, it wasn't:
- Missed on deliveries, logistics problems, revenue miss, EPS barely beat.
- Let's not forget this stock has a 80PE and a valuation based on never ending growth, 0% interest rates, and meme stock buying. Rates are at 5%, consumers ran out of disposable income/savings, Tesla lost the "wow" factor, all other competitors are in the space now.
- I told you to sell calls: https://www.reddit.com/r/wallstreetbets/comments/xurrbx/tsla_time_to_sell_calls/?utm_source=share&utm_medium=web2x&context=3
- I told you tesla growth story was dying: https://www.reddit.com/r/wallstreetbets/comments/y1dtf7/tsla_is_dying/?utm_source=share&utm_medium=web2x&context=3
If you bought calls, enough the down move, but look to be adding puts at the 200 price level. I recommend selling the -190/+180 put spread to balance out the sold calls. If you are bullish in Tesla (why tho?) then just sell those puts because IV is going to be crazy in the AM if we gap down hard as expected .
Which Week is Best to Trade on Tesla?
Here is a custom chart I made for you. Let's review the implied volatility in Tesla over the next 10 weeks. As you can hopefully see in this chart, IV for calls is higher than puts! It is all you dumbasses bidding up the calls. I highly encourage anyone holding calls to sell, and if you are not long calls, then start shorting them. 4 weeks out has great liquidity, high volume, tight spreads. That is where you want to be.
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Volatility and Volume x Week
Which Strike is Best to Trade on Tesla?
Here is another custom chart I made for you guys. The "lighter" colored lines represent Black Scholes and what the options "should" be priced at. The solid color lines are the real prices.
In looking at this chart you can see that, because of our collective stupidity, IV for calls is higher than puts (people are dumb and buying calls). Conclusion, sell calls!When we look at the strikes we can see there is a lot of volume and liquidity at the nice round numbers like 190,200,210, 220.
If you are selling options, sell those that are overpriced (OTM puts and ITM calls) and buy those that are underpriced (ITM puts and OTM calls)
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Tesla going to 200 this week, breaking through it probably next week.
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Tesla is starting the long road down
And now to the overall market.
Tesla earnings just killed all hopes of a sustained rally. Our lord and savior Elon has forsaken the market with the elevated valuation that now has to come back to earth.
We are going to sell off next few days, at least till Friday, and this is why:
- 10 year rates new high:
- 2 year rates new high:
- Dollar nearing highs:
- Crude on the rise again (nice try Biden)
And remember, we just had a meaningless rally after an AWFUL CPI report. The Fed will crush the market further. I explained the recent rally here https://www.reddit.com/r/wallstreetbets/comments/y6fd2y/trading_spy_week_of_oct_17th/?utm_source=share&utm_medium=web2x&context=3
Recommendations: Sell the -360/370 call spread. Add puts when we hit 348 again on SPY and sell the -340/+330 put spread mid November expiration.