Buying TSLA put contracts.
Tesla Inc. (TSLA) has lost momentum after its dramatic surge last year.
Despite aggressive growth expectations, TSLA is still a very expensive stock compared to forward earnings. As growth stocks fall out of favor, TSLA is breaking down.
Since the name is so widely owned, a break of support could cause a mass exodus, leading to a sharp drop for some time to come.
Buying March $1,000 put contracts gives us time for the trade to evolve. We’ll also get the benefit of close to a $1 for $1 option price movement if the stock drops, while muting potential risk through added time value if the stock rises.