I believe another down day for Tesla is in the works. Yesterday, the price action behaved just like I thought it would. At open, Tesla went up as market makers reverted to the mean VVWAP. But then it fell, giving us a 31% winner on our puts.
Today, I think we’ll experience more of the same. Tesla’s 9-Day SMA is still below the 20-day. Not only that, but even though yesterday’s price finished up, yesterday’s candlestick still is engulfed by the previous day’s red candlestick. I’ve found that when this happens, it often means that the reversal failed.
I will say that trading today could be volatile. Earnings are coming out after hours, so we could experience a ton of movement toward the close.
Trade Idea:
Price Target: $205
Options Contract: 26 JAN 24 $205 CALL