Mike Khouw's Tesla Options Trade: All-Time High A Resistance Level

On CNBC's "Options Action," Mike Khouw suggested an options trade in Tesla Inc TSLA. He said it's hard to value the stock, but he sees some important technical characteristics that can help him set up the trade.

Khouw sees Tesla's all-time high as a resistance level and there is also an unfilled gap between $650 and $685. He wants to take advantage of high implied volatility and buy the June $685 put and sell two June $650 puts for a total credit of $12.50.

The trade is going to make money if the stock stays above $602.50 at the June expiration. It would reach its maximal profit of $47.50 if the stock closes at $650 at the June expiration. If the stock closes below $650, Khouw is going to have to own the stock at that price.

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