For investors parked in Tesla Inc (NASDAQ:TSLA) it’s been nearly a year since being able to enjoy rocket ship or turbo-style gains. But that doesn’t mean it’s the end of the road for Tesla stock.
Rather, the price chart is showing the right type of fuel necessary to launch shares and their bearish detractors higher, as well as offer a solid and grounded opportunity for bullish TSLA investors. Let me explain.
As I’ve stated in the past, don’t confuse the hazards of investing with roadblocks that can’t be overcome. This seems particularly true of Tesla stock. The company, as most active investors are aware, has its share of vocal non-believers occupying the headlines with their bearish and dire warnings.
Currently, items such as Elon Musk’s hefty compensation plan and growing Model 3 competition from the likes of Porsche and Jaguar have kept the ink wet on Tesla stock for bears.
Maybe tomorrow it will be back to TSLA’s cash flow issues, Model 3 missteps or Elon Musk spreading himself to thin? I honestly don’t know. But I do know when I see a stock like TSLA parked nicely on the price chart and indicating a drive higher isn’t that far down the road.
Tesla Stock Weekly Chart
Since last writing about Tesla stock at the tail end of last December, shares have continued to consolidate and test prior resistance for support with a successful, high-level double bottom pattern emerging earlier this year.
Where does TSLA go from here? Can it motor higher from its current parked position and similar to what shares accomplished in 2017? Or are shares destined to break support and crash lower? This strategist sees the former path as the one of least resistance.
Being optimistic of higher prices in Tesla stock may not seem logical at the moment given a modestly weak daily chart. Nevertheless, I’m willing to appreciate the current near one-year long consolidation and the prior massive basing pattern, as beneficial technical platforms for new highs down the road.
TSLA Stock Moderately Bullish Butterfly
Reviewing Tesla stock’s options for bullish ideas in anticipation support will hold and the share price will eventually drive higher; I’m favoring the long May $350/$380/$410 call butterfly. With shares of TSLA at $328.20 the combination is priced for $4.25 or a smidgen more than 1.25% of the risk associated with holding long stock on Tesla.
The real cost which needs to be appreciated with this spread is it is only moderately bullish. If a post-earnings reaction, among other potential drivers of TSLA, is so powerful as to overtake the $410 call strike, the full debit will be lost.
The good news is this spread maintains a very nice size profitable range in-between $354.25 to $405.75 with a max payout of $25.75 if Tesla stock finishes at $380 on expiration in May.
Bottom line, that type of perfection is highly unlikely. However, the 16% needed to park TSLA near range highs has been traveled before and looks more likely to happen again and sooner than the time it will take to put a man on Mars.
Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.