TSLA Trade on Aug 21, 2020 14:40 from Marius: Tradervue User Stock Trades.

Big Picture
Markets have been continuing the main trend with rotation back into mega cap technology. Very bullish environment w/ economic reports improving to flat. Earnings season is just about over and the FOMC has reiterated prolonged interests rates. There is still no deal on the next stimulus package. There are also ongoing tensions w/ China on trade. Elections is less than 3 months away. Volatility has come down to initial pandemic levels. There are many companies in stage 3 of vaccine trials and this is with flu season looming closer. Volume has been lower in the main indexes due to end of summer month seasonality. Next week will be interesting on how the market and institutions manage capital. Fixed income and precious metals have been relatively weaker to equites since last week and the dollar is still weakening. More bid in the equites and sentiment is still mixed in the midst of the Coronavirus development.

Intraday Fundamentals

This trade was put on with a bullish thesis. AAPL initiated a 4:1 stock split and TSLA followed. This is primarily bullish in the long-term for well managed and growth companies. AAPL has split 4 times in the past and this is the first time for TSLA. Fun fact, AAPL would be worth over 24k per share if it hadn't split those times. The shares need to be held through the close of next Friday to be eligible for the stock split to commence and trade the following Monday. There is more incentive to hold the stock due to the share restructure, however other participants may have a different strategy in mind and may take profits before the split.

Trade Plan
I'm selling the 1300 puts which have an Open Interest of 4,654 w/ 1,192 contracts traded today. Delta is -.02. Theta -1.56. Vega .14. (This is one of the lowest delta's I've traded with a premium worth 1:1 estimated -250.00 risk on the trade. The market is implying that there is a 2% chance of the stock reaching the 1300 strike price by Friday. It can change drastically as in last weeks example showing a 25% chance of the stock closing above 1750 this past Friday)

This is the first time I'm trading with enabled Tier 3 options margin enabled. I can now increase size of selling options without owning an underlying and or with a spread. This is considered very high risk but the current track record shows that my strategies have been working. I have an exit plan in place and if the shares are exercised to me then I will trade out of the position as appropiate.

I entered the trade a bit early as I had training scheduled but pre-planned a case where there would be an end of the day sell-off. The strike is about 35% away and the premium was worth it for a first trade and set-up opportunity. My paper trade from last week same strategy is yielding better performance but I did not have Tier 3 enabled yet. I'm keeping in mind the higher rate Theta time decay and options going into the weekend.

Worst case scenario is TSLA continues to sell-off and put premiums increase. I have a trade decision to sell calls or sell more puts or stay with the current position and anticipate an assignment of the stock (which would be a 35% discount as of Fri close) to be managed as an intraday trade if so...

RVOL 1.56
AVOL 13.65M
Short Float 6.4% (Koyfin data)
ATR 100.65
Shares Float 148.40M
Inst Own 53%
Market Cap 375.17B

Technical Analysis

For "The Book of Charts"

Options chain pre-planning entry day before.

Trade Review
I had placed a closing order before the market opened to capture 50% of the max profit on the trade. Thought process is that it was a 7 day option and if the trade can capture 50% of that in 1 trading day or less then that is highly favorable as it decreases exposure and risk for the remaining. The trend may resume in some cases and the option may collect 100% return but in this case I'm playing it conservatively with current market and price action development. There was notable selling in the AM session following the open but buyers around 2000. This was after the gap along with markets.

This has been my style of trading more recently and it shows with the performance assessments. Win rate is above 85% since April. Approaching end of the month and keeping things in progressive perspective but less aggressive. Going through the new SMB Options Foundations course and Peak Performance program and applying it to the current process. Still also paper trading on the side continuing to extend my strategies and range. Will be bumping risk and profit targets over the next week and into the new month to take the next step.