On Friday’s CNBC’s Options Action, the crew analyzed the performance of Tesla. With a large divergence in earnings expectations and an implied move of over 7% up or down on earnings, Tesla is likely to see volatility next week. Tesla has recently formed a head and shoulders formation which is bearish, targets $290-300 level to the downside. Additionally, with such stretched valuations and the risk of a poor product launch, there are risks to the downside. Expecting a move lower on earnings, Michael Khouw suggested buying an Aug 335/310 Put 1×2 Spread for a $2.50 Debit.
We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: CNBC Options Action