$TSLA Distribution Nearly Finished
The reaction this past earnings report confirmed a trend line from the ATH and subsequent second attempt, but the -10% move seemed to hammer in a short-term floor. So the past 4 weeks I have been selling calendar straddles and strangles all over the 770-815 range with tremendous success. I opted not to continue selling volatility because the premiums have just dwindled and price action is getting TIGHT. It would seem that something should happen soon.
Here's what I got for my bearish thesis-
The gray rectangle with Magnet text should be self-explanatory but brief explanation- we can see how candles in this zone are surprisingly sparse. Lots of gaps up and down here. My expectation is that when we get to the $700 area, if it falls through there it's going to fall FAST!
I am filling a slew of bearish spreads targeting the 7/17 Expiration just before next earnings. That exp date has some elevated Implied Volatility for selling calls and decent volume. If you are planning to trade with options, always be smart-- don't try to hit home runs on every pitch, and buy yourself time.
Here's what I got for my bearish thesis-
- Pennant Pattern I am not saying this is a bullish or bearish pennant at its finale, but it is a pennant nonetheless and we are at the top of it
- Psychology and Emotions Weekly Highs continue to diminish. If you are someone who owns shares, especially if you purchased near the highs of February, your opportunity to escape with profit, break-even, or minimal losses is fleeting
- Smart Money Dumb Money follows the carrot Smart Money dangles in front of them. We are up about 128% from March lows. Smart Money has been distributing the shares it accumulated in April and seems to continue to do so in May. It needs more accumulation and won't do it at these prices
- Retail FOMO I use Market Chameleon for options research and hilariously I've outlined the most bullish and bearish skew days in the last year and look at what happened following. May 26th was a highly bullish day for skew. Sentiment can be a great contrarian indicator
- Risk Premia As said earlier, the premium on selling options has subsided big time. There's just not much juice left to squeeze from keeping price around here. Puts and Calls now favor the buyer, not the seller
The gray rectangle with Magnet text should be self-explanatory but brief explanation- we can see how candles in this zone are surprisingly sparse. Lots of gaps up and down here. My expectation is that when we get to the $700 area, if it falls through there it's going to fall FAST!
I am filling a slew of bearish spreads targeting the 7/17 Expiration just before next earnings. That exp date has some elevated Implied Volatility for selling calls and decent volume. If you are planning to trade with options, always be smart-- don't try to hit home runs on every pitch, and buy yourself time.
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