27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.
Tesla Inc (NASDAQ:TSLA) becoming a member of the S&P 500 index on Monday will not have a large effect on the valuation of the benchmark, as per Goldman Sachs analysts.
What Happened: According to Goldman strategists led by David J. Kostin, the addition of the Elon Musk-led company to the index would have a minimal impact on the valuations because of nuance in the index metric calculations, CNBC reported Thursday.
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Tesla is trading at 167 times earnings currently, as per FactSet data. Apple Inc. (NASDAQ:AAPL) and Amazon.com Inc. (NASDAQ:AMZN), two other stocks that see high-interest, are trading at 31 and 72 times earnings, respectively, CNBC noted.
The Goldman analysts said — with Tesla’s large size and elevated multiple — investors think wrongly that the company’s inclusion in the S&P 500 will elevate the index's 22x P/E ratio by “two multiple turns or more.” Instead, the inclusion will “lift the index P/E ratio by just 0.4 multiple turns.”
“The inclusion will lift the aggregate index P/E multiple by slightly less than 1.5%, or less than half of a P/E multiple turn," Kostin said, as per CNBC. "This impact would be similar whether the stock traded at a P/E multiple of 170x, 500x, or 1000x.”
Why It Matters: Goldman explained that even though S&P 500 constituents are weighted as per their free float cap, index metrics treat the benchmark as a sum total of its individual constituents instead of a cap-weighted average.
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Kostin said the addition of the automaker to the index would have a "meaningful impact" on its performance.
The investment bank said had Tesla been a constituent all year, the total index return would have been higher by nearly 200 basis points from 16% to 18%.
Tesla has outperformed the S&P 500 by roughly 640 percentage points.
This month, Goldman upgraded Tesla from Neutral to Buy and raised its price target from $455 to $780.
Price Action: Tesla shares closed nearly 5.3% higher at $655.90 on Thursday and fell 1.2% in the after-hours session to $648.
Related Links: Can Tesla's Dizzying Valuation Ahead Of S&P Inclusion Last? Analysts Are Divided
Click here to check out Benzinga’s EV Hub for the latest electric vehicles news.
27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.