Technician: Tesla Is Targeting $160
Implied volatility is very pricey, he noted, indicating a $20 move is expected. Tesla is currently trading below $210, down nearly 4 percent on the session.
According to his charts, Kwapik identified a head and shoulders pattern, with the neck line at $216 to $217.
Fundamentally, Kwapik says that poor China sales and Apple Inc. (NASDAQ: AAPL)'s potential electronic car competition has the stock in a vulnerable position.
If traders are bearish on the stock, Kwapik mentions looking out to the March or April expirations for lower implied volatility.
Long-term put spreads could be the most cost-effective way to take advantage of a move lower, he concluded.
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