A few weeks ago we looked at using put options in a choppy markets that had the storm cloud of earnings on the horizon. (you can read it here.) Earnings came and went and the storm rolled through. The stock we looked at was Tesla, TSLA and it didn’t disappoint in disappointing. This was on top of us spotting it about a month prior to that with another put option that doubled. (you can see that article here.)

Take a look at the chart:

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In the first instance, it was the sheer momentum to the downside that revealed an opportunity for a great put options. In the second, it was the failed attempt to get back above the 10 day moving average that confirmed it wasn’t done dropping.

These signs are easy to spot when effective momentum tools are used. Joe Duffy outlined some of the most powerful momentum tools in his Little Black Book of Momentum Setups. It is a quick read and you can grab it here.

At this point we are going to keep grabbing up the put options on Tesla as the slide continues. If we see another break above the 10 day and we see the MACD (the indicator at the bottom of the chart) start to curl up, that is our sign that the put gravy train is out of gas.

Keep learning and trade wisely,

John Boyer


Market Wealth Daily