Mike Khouw's Bearish Tesla Trade

On CNBC's "Options Action", Mike Khouw shared with the viewers his options trading strategy in Tesla Inc TSLA.

The company is going to report earnings on Wednesday and Khouw wants to set up a bearish trade. He wants to buy the August 335 put for $14.90 and sell two August 310 puts for $6.20 each. The options structure is going to cost him $2.50 in total and the trade breaks even at $332.50.

Khouw could make a maximal profit of $22.50 with the trade, if the stock drops 7.48 percent to $310. If the stock drops below $310, Khouw is going to have to own it at $310. He would start to lose money below $287.50.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Date of Trade
ticker
Put/Call
Strike Price
DTE
Sentiment
Posted In: CNBCOptionsMarketsMediaMike KhouwOptions Action
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!