Tesla’s robotaxi event is now in the rearview mirror and investors seemingly wanted more. The movement in the patience-to-impatience investor pendulum for Elon Musk (and Tesla) has fully swung to impatience. I believe this initial negative reaction (down nearly 10%) is presenting a discount in Tesla (TSLA) shares and I want to use options to create short-term income while I wait for a short-term bounce. Musk rolled out the company’s latest vehicle, the Cybercab (I thought it was really cool). He also revealed their prototype of CyberVan, and he had a fleet of Optimus robots showing off their newly gained capabilities (pouring drinks was one example). Production of the Cybercab is slated to start in 2026, with availability anticipated before 2027. Tesla plans to introduce full self-driving (FSD) capabilities in California and Texas as early as Q1 2025, pending regulatory approvals. But analysts clearly wanted more concrete details on when the robotaxi business would get going. TSLA 3M mountain Tesla, 3 months There are either lovers or haters of Musk. However, it is critical to remember that every seller needs a buyer and his unwavering passion for autonomous driving is a benefit that all should participate in. The trade Tesla is a stock that has become more intensely emotional as Musk is in the news daily. I want to capture the emotion in today’s tape by utilizing a Risk Reversal options strategy which takes the premium I am collecting from the put option I am selling to finance and buy the call option. This is a credit spread that results in collecting a substantial short-term amount of premium. An investor has to be comfortable owning Tesla if sellers continue to dominate in the short-term downward trajectory but, the upside is unlimited if Tesla can find a way to finally get out of the red for 2024. The Trade (Risk Reversal) Sold the $215 11/15/2024 Put Option for $14.50 Bought the $245 11/15/2024 Call Option for $7.25 Collected $7.25 ($725) per one spread Tesla was roughly trading $216 when this spread was executed This is a profitable strategy as long as Tesla stays above $208 since the collection on $7.25 brings the breakeven point of the potential $215 put option assignment down to $207.75. My view is obviously short-term here with just over 30 days for this spread to materialize. DISCLOSURES: ( Long Tesla, long this Risk Reversal) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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