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Oct 2019 – TSLA $320-$310 Put Debit Spread

Stock
TSLA
Trade Structure
$320 - $310 Put Spread
Trade Date
10/29/2019
Expiration Days
11/15/2019

Trade Rationale

With earnings behind us on 10/23, TSLA shot up to the moon. Trying this trade for a short 17 days to see if TSLA gives up some of those gains and normalizes a little. We bought a TSLA $320 - $310 debit Put spread for $438. If TSLA stays at or below $310 in the next 17 days, we will double our money. NOTE: I use these "toe dipping" trades to test the market before adding on to my positions. If this TSLA trade doesn't work out, then I will not be adding any more positions. But if the market starts dropping, I will keep adding more and more positions.

Trade Selection Criteria

Overall market movement

Market just hit an all time high with SPY touching $303 for the first time.

No Earnings or Significant News

Earnings are behind us and were announced on 8/23. There is no significant news or earnings event during our trade cycle.

Bollinger Bands outside Keltner Channels

Bollinger Bands are outside Keltner Channels. We are not in a squeeze or low volatility period.

RSI Analysis

RSI is curving down after being in over-bought zone

ADX Analysis

ADX being a lagging indicator is not showing anything conclusive. However, DI+ line is curving down show loss of positive momentum

Trade Analysis

This trade was a loser and we had to close it out at a loss of $219. As you can see in the chart, "china trade deal rumors", "tsla 18 wheeler truck unveil", "tsla gigafactory" i.e all headline risks affected our trade and caused it to be a loser. As mentioned in my book, losers are part of the game and you just have to unemotionally follow your trading rules. We don't make any adjustments or try to add rolling trades on the same one. It just messes with your emotions, making you think you can somehow salvage the trade. Just accept the losers, close them and get ready for another trade. It is a very simple philosophy but works like a charm
Trade Outcome
LOSER
Profit/Loss
$219
Beginning Account Balance
$15,800
Ending Account Balance
$15,600

To follow along the strategies we use in the $25K challenge, we recommend that you get the strategy book which explains the whys and wherefores of our method. Get it here=> https://amzn.to/2MUOCE5

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