CNBC Options Action's Dan Nathan suggested to the viewers to consider a short position in Tesla Motors TSLA.
He explained that the stock broke the resistance at $265 in August and jumped to its new 52-week high at $291.42. It looks to him that Tesla is going to return to the $265 price level and consolidate there in the near term.
On Friday, the stock fell to $277.39, and Nathan doesn't want to press on this trade on a down day. He wants to wait and see if Tesla is going to show some weakness early next week. To make a bearish bet, he wants to use options, specifically, the September - October 265 put calendar.
Nathan would buy the October 265 put for $8 and sell the September 265 put for $3. The net premium for this trade is $5, and that is his maximal risk. The breakeven is at $260.
Mike Khouw commented that he likes this trade, while Carter Worth believes that Tesla is going to continue to move higher.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
