If you’re a regular reader here at InvestorPlace, you know that I’m a long-time bull on Tesla Inc (NASDAQ:TSLA). In short, I like the company’s long-term outlook, even though there have been several short-term bumps in the road. Specifically, Model 3 production remains a major hurdle for Tesla stock.

Last week, however, TSLA made a move that may signal an end to these concerns.

For the first time, Tesla began reaching out to first-time buyers to configure and reserve their own Model 3s. In other words, Tesla is now taking orders beyond its current reservation list. The move hints that production bottlenecks have been dealt with and that’s providing a considerably bullish sign for investors.

Prior to the news, Tesla stock was already in rally mode following the market correction. TSLA had rebounded about 7.5% just prior to the Model 3 news. But the rally slowed near resistance at its 200-day moving average. Following the news, Tesla stock surged past this oppressive trendline. The stock is now poised to challenge former technical resistance at $360.

Given the recent buildup of negative sentiment, there is plenty of room left for additional short-term upside. For instance, Thomson/First Call reports that only eight of the 23 analysts following Tesla stock rate the shares a “buy” or better. The 12-month consensus price target also rests at $326, a discount to TSLA’s current trading range.

If Tesla’s Model 3 production issues are fully on the mend, I would expect upgrades and target price increases to follow in short order.

Next up, short sellers are already fleeing TSLA stock. During the most recent reporting period, the number of TSLA shares sold short dropped by 3%. Still, more than 23% of Tesla’s float remains sold short, providing ample fuel for a short-covering rally as the stock continues to move higher.

Finally, if TSLA stock short’s are considerably unprepared for a short-term rally in the shares. TSLA’s March put/call open interest ratio currently rests at 1.16, with puts firmly outpacing calls for the series. Since short sellers typically buy calls to hedge their positions, this lack of call open interest leaves Tesla stock shorts more vulnerable to a squeeze situation.

And there is a fair degree of potential upside over the short-term for Tesla stock. March implieds are pricing in a potential move of about 6.8% for TSLA heading into expiration. This places the upper bound at $376 and the lower bound at $328.

Two Trades for Tesla Stock

Call Spread: For traders looking to bank on a continued short-term rally for Tesla stock, a March $355/$360 bull call spread. This spread was last offered at $1.88, or $188-per-pair-of-contracts. Breakeven lies at $356.88, while a maximum profit of $3.12, or $312-per-pair-of-contracts — a potential 67% return — is possible if Tesla stock closes at or above $360 when March options expire.

Put Sell: For a more neutral-to-bullish play, the March $320 put sell is a solid option that has an excellent chance of finishing out of the money. At last check, this put was bid at $2.51, or $251-per-contract. In this trade, you keep the premium as long as TSLA stock closes above $320 when March options expire. On the downside, if TSLA trades below $320 prior to expiration, you could be assigned 100 shares for each put sold at a cost of $320-per-share.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.