When Tesla (TSLA) heats up like it is right now, it’s tempting to jump in…
But I’m taking a measured approach to capture gains without overcommitting to shares at high prices. Tesla’s rally has been impressive, and while I’m bullish on it overall, I don’t want to fall into the trap of buying at these lofty levels and hoping for the best.
Instead, I’m layering on strategic spreads and carefully managing risk to keep my portfolio primed for gains without exposing myself to the full weight of the stock.
Right now, I’m positioned with a mix of ratio spreads — bull call spreads, and bull put spreads on Tesla. I don’t want to chase the high, but I also don’t want to miss out if the momentum keeps pushing it up.
Here’s my thinking…
Tesla is trending up, but I’m not going to overpay — one of the worst things in trading is to chase! I’d rather see a pullback or even a bull flag formation to jump in with a bit more conviction, setting myself up for a controlled win if we see another leg up.
Until then, the spreads allow me to benefit from the stock’s rise while avoiding the downside of buying at the current level.
To break down the trade, I’m sitting on a 250 by 255 bull call spread, which I picked up at a cost of $2.25, with a maximum profit potential of $2.75.
This kind of trade lets me capture Tesla’s upside without the risk of holding the full stock position — a key strategy when a stock is running hot.
Now, could Tesla come back down to $250?
I don’t believe so, but I’m prepared for it if it does. And if it doesn’t, I’m still in the green. I’ll let this trade ride and see if it fills that gap. I don’t mind being patient here — the last thing I want is to chase, buy shares at $350, which is where it’s at Monday afternoon, and hope it goes higher… only to see a 5% pullback next week.
Tesla has open space ahead, and if it can form a solid bull flag, I’m ready to add more debit and credit spreads to capture that upside.
My rule with high premiums and this level of volatility is simple: I want to dollar-cost average into strength rather than go all-in at these prices. A little patience goes a long way, and I’d rather add in with spreads and manage a controlled risk than be forced into an unfavorable position.
With each move, I’m keeping my eye on Tesla’s next potential highs and the pattern it’s setting up. This mix of spreads allows me to capture gains from Tesla’s momentum while keeping capital free for other opportunities — that’s how I prefer to handle a market darling like this in a major upswing.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. Genesis Hour: The Key to Double- and Triple-Digit Moves
If you missed out earlier today, Tom Busby unveiled Genesis for the first time ever…
And the attendees went wild!
But don’t worry…
You still have a chance to see the ins and outs of the Genesis Algo one more time today.
Tom is back in the live room at 8 p.m. ET to reveal how the Genesis Algo has shown the power to pay 25%… 50%… even 100%+ ROI…
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Naturally, we can’t promise gains or prevent losses…
But as soon as you see how this next-generation smart algo automatically sends you high-powered trade alerts… nearly every single day…
We think you’re going to be blown away when you see the potential.
The profits and performance shown today are not typical. We make no future earnings claims, and you may lose money. The trades expressed are from historical data in order to demonstrate the potential of the system. However, from June 9th, 2023 – November 11th, 2024 on the LIVE trades in real time, so far we have seen a 78% win rate with a 17.8% average winner and a 6.2% average return over a 2 day average hold time.
