The Teach giant Tesla, has exceeded a $1,000 share for the very first time and with that it entered into a $1 trillion club. The company stock has rallied nearly for 13% as the rental car company Hertz went on to say that it will be buying 100,000 models to take the hike up of the vehicle and furthermore it will be fulfilled by the end of 2022. “It’s one of those typical tickers that generally will trade around a key psychological value, and in the options market it tends to stick at those levels,” Danielle Shay, director of options at Simpler Trading, told CNBC’s “Trading Nation” on Monday.
After hitting the latest milestone, Shay is ahead of targeting a level higher. I’d look at a $1,200 price point. We’re within that range for a November series expiration, and I like to trade it with [butterfly spreads]. They’re cheap, low risk, high reward, and they make for some great momentum trades,” she said. Shay suggests trading a longer-dated butterfly spread for Tesla — for example, buying the 1,050 call, selling the 1,200 call and buying a second call at 1,350, expiring either November or December.
“The reason I would say even December is because I love the Santa Rally plus January effect plus run into earnings in January,” she said in a follow-up email to CNBC. She furthermore mentioned that, “January has been my best month of the year for many years in a row. It just seems to be a perfect storm, so I put more risk Dec/Jan.”
The move of $1,200 further implies roughly 17% upside from Tesla’s close. It has moreover traded at nearly $1,025 by the end of the upcoming season. Ari Wald, head of technical analysis at Oppenheimer, is also bullish on Tesla and agrees with Shay on a $1,200 target. Wald had previously called it a buy on Oct. 4 — it closed that session just above $781.
“If there’s one piece of investment advice, the best that we give to our clients, it’s to let your winners run, and this is a winner,” Wald said during the same interview. “If you look at the stock, the recent strength that we’re seeing in the chart is a move above its January peak, and we think this breakout is marking the resumption of Tesla’s longer-term uptrend.” “That breakout point at $900 is now support and measures to $1,200 coming up. We like it higher,” he said.
Tesla shares have risen 45% this year.
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