Tesla Sell the News - Model Y

Tesla announced their new Model Y last night. This new model should produce great profits for Tesla for years to come and will probably be produced much faster than anyone expects because the doubters remember how long Tesla took to mass produce the Model 3 and they are wrong expecting the same for the new Model Y.

Regardless of Tesla's future, it always trades the same on Friday's after a funky Thursday release of news whether good or bad. On Thursday, Tesla's stock ran up a little, but pretty much ended the day unchanged. The market didn't like the release of the Model Y despite the company almost did it perfectly if Elon Musk didn't stutter so much throughout the presentation. So let's break down how it trades.

Tesla opened down from Thursday's close and fell down after that. It fell quickly, had a small tooth up and fell further down. If you didn't get out of your Put options there, you would have to wait until 3pm to get out for close to the same profit. After the bid drop, Tesla moves up about half of the move before falling for the rest of the day. I would not recommend buying the morning bounce unless you were willing to sell it quick when it hits the morning top.

I recognized this pattern as it has happened many times in the past year with Tesla. I let my emotions get in the way and didn't pull the trigger properly. I bought near open, sold afraid of the bounce up, bought again when heading down, didn't sell quick enough at the morning bottom and finally I was not patient enough to wait for the afternoon bottom.

So since there is a downward Friday pattern, there is a following week pattern too. Typically, you could buy a call for the following week and be happy on Monday as it is oversold for the same reasons why it gets bought the following week. As long as Elon Musk doesn't go Twitter happy next week, I would expect to hear some good news like Tesla has produced 5k Model Y's over the weekend. I would look to buy calls near open and sell on the upside and don't play the downside during the week. You should get additional opportunities to buy more calls at a lower price the next day. I don't like hoding over night on Tesla because you will get burned.

Obviously traders are not in charge of the stock of Tesla. Algorithms and computers are in control of the trading of Tesla. Day traders only add to the fuel, but don't determine what happens with the stock of Tesla. It is unfortunate, but I write this blog in hopes to help someone, but most importantly try to improve my own trading to avoid making the same mistake and profit by these moves. I should have been up over $800 from Tesla alone, but because I let my emotions weigh more than my knowledge of the stock, I was down $200 in my Tesla put options today.

Thankfully I did not make the same mistake with Alphabet (GOOGL) this afternoon. I got in a little early and when my Put options got in the money, I did not set my limit order and missed out on half of the profit. I am thankful to be able to trade another day and hope to be more patient every day and to go with the flow while not marry my positions.

Day Trading with Paper Money

I have grown frustrated with Charles Schwab and their lack of comprehensive mobile trading software. I decided to try some alternatives, so I first tried ETrade over a year ago, so my period of discounted trades have come and gone. I did find that TD Ameritrade provides as many tools if not more than ETrade and they provide a free paper trading account.

With TD Ameritrades free paper trading accoun, I bought 5 Tesla 320 call options with February 22nd expiration when Tesla was traded down to 309 as it appeared to bounce off 309 about an hour earlier. I was feeling good about this trade since it closed at 311 on Wednesday.

In an account with real money, I was actually short (sold with expectation of profit by depreciated premium) a 280 strike Put Option with a March 1st expiration that I sold the day after Tesla reported earnings when it was at 307. I felt good about that strike price going to 0 because Tesla just bounced off 280 in the previous week and it didn't appear to want to move lower than 300 the day after earnings. The premium was still high because it was the day after earnings so I received over $814 for a strike price 27 points away!

As Tesla moved up for the next couple of days, the premium fell. When Tesla moved up to 324, this option that I was short was worth around $320. Tesla moved between 318 and 324 before moving lower on this past Wednesday when I bought back the Put Option for $226 as it appeared that Tesla was going to move lower. I decided that I took most of the time depreciation out of the option and would cover it so I could sell another one when Tesla moves lower.

More news came out after Wednesday's close that would negatively impact Tesla's stock price so I felt good about covering the Put Option that I was short on and hoping to find another time to sell the same strike option. That time came on Friday when the FANG stocks opened higher and moved down quickly. Tesla opened lower and moved up slowly. When shorts were in control of Tesla in the past, Tesla would move lower on Friday. This time it didn't want to move lower and kept trying to move higher.

When Tesla was at 305 on Friday, February 15th, I sold another 280 strike Put Option for $585 with a March 15th expiration. I like this expiration because it shows a level of recent support which means that even if Tesla moves lower over the next month, it will be affected by time decay on top of negative option movement since I expect Tesla to move back up to 320 in the next week.

Unfortunatly, I checked my paper trading account with TD Ameritrade after the market closed on Friday and found that the trailing stop order I placed Thursday afternoon for the 320 strike 2/22 expiration Tesla calls executed Friday morning at 9:33 am when Tesla was trading at 304.

I clearly would not have wanted to sell it there and creates a new learning lesson. Thankfully it was with paper money and didn't hurt financially.

LEARNING LESSON: Do not place a trailing stop with a GTC (Good till Cancel) ever without an additional trading condition like price. You may not place an order and not monitor it and expect to profit.

I still have more time with the paper trading account with TD Ameritrade and expect to practice with it more this coming week.

Trading After Amazon Earnings

On Thursday, after the market close Amazon reported their fourth quarter earnings. They beat their earnings expectation, but due to increase expenses as stated on the conference call, and drove the price down largely. It attempted to make her early recovering, but just think further and further.

Like last year, when Amazon and Google disappointed on their earnings, the whole market came down. It is extremely important to make sure that you get out of your trade in a timely fashion. When you get too greedy, you end up losing more than you gained.

I got out of my puts on Alphabet missing the right time and
costing me $600 on Thursday. I didn't make the same mistake today which was very important because it was the day of expiration. I did make money on alphabet 1130 calls, but lost a little too much on a 1135 call that I didn't sell promptly.

Alphabet's normal trading on Fridays consist of going up sharply, retracing down near the low the day, going back up and falling short of where it peaked earlier, and going down for most of the rest of the day. Very good money can be made with puts and decent money can be made with calls on Fridays as long as your problems with your execution and don't fall in love with your holdings.

From my chart above you can see where I recommend positions. This is the typical movement of Alphabet on a Friday, but the past 3 out of 4 weeks it has not moved in the typical pattern.

Then there was Tesla. After reporting fourth quarter earnings on Wednesday afternoon, we didn't get a big movement in either direction. I believe it would have fallen further if Tesla reported a loss in the 4th quarter of 2018. Since Tesla reported a slightly lower than expected profit and already came down so sharply in the prior week, it should back up to trade above 330 next week. I bought 2 315 February 8 calls on Tesla within the first few minutes of Fridays open.

I don't like holding options over night because you don't know what will happen by the next day let alone after a weekend. Typically you can buy the same calls on Monday unless Tesla opens considerably higher. Hopefully I can benefit from Tesla running up to 330 early Monday morning and I can sell then.

On Thursday morning, when I saw that Tesla was not going down, I decided to sell a covered 3/1/19 Put with a 280 strike price for $800. I picked that strike price because it bounced off 280 at the bottom of the most recent drop before the earnings release. Therefore I expect it to go up and this option expire worthless on March 1st, but if it does go down by then even in a larger market decline the level of 280 should hold for Tesla. I found this strategy makes more sense than being subject to risk of holding on the stock.

I got fed up with UGAZ and it's strange movement that don't make sense. I did find that Antero Resources Corporation (AR) does make sense as it is a company in the Natural Gas field with positive earnings and does have options available on it. AR his a 5 year low on Thursday below 10 and it bounced when UGAZ didn't. UGAZ went down further on Friday, but AR went up. When AR was at 10.21 on Friday, I sold 5 3/15/19 10 strike Puts. I might decided to buy this stock also, but at this point I feel I can make a high probability profit even if it doesn't go much higher by expiration.

I had been following someone on YouTube recently who discusses options trades, but I have found him making some dumb errors that didn't make sense. I am not saying that I am an expert, but to sell an out of the money naked call option 5 months out on Boeing the day before earnings has to be the dumbest move I have ever seen. There is a possibility that it goes down and he might be able to buy it back slightly over what he received on it. There is a probability that Boeing blows through that 400 strike price before the next earnings call, especially if there is a trade deal done, but definitely by their next earnings report.

This year is starting to look like last year in terms of the market movement, but this year is quite different. Last year the market had a large amount of volatility due to over inflated market after the next tax bill was passed, companies wrote off more expenses in the fourth quarter of 2017 to take advantage of the higher tax break, emerging markets were declining, new Fed Chairman Powell starting moving interest rates too quickly and trade tariffs were affecting everyone when nobody was expecting them at all.

This year is different because the Fed chairman has learned how to talk without disrupting the stock market, we might be getting closer to a trade agreement, and consumers are about to experience some of the largest tax refunds ever. Amazon's warning of higher expenses might have spooked investors Thursday and Friday, but it is the same thing that Google did last year when everything reversed course. It was pointed out on CNBC's Options Action on Friday that Alphabet appears to be in a head and shoulders pattern, but you could say that about so many companies that I broken out after hitting a 52 week low and bounced to move sharply up. Typically these 52 week lows have been 50% of their all time highs. Alphabet is the one FANG member with probably the highest diversity along with the lowest growth movement. I don't see Alphabet moving more than 100 points lower, but I also don't see that coming until it have moved 300 points higher.

Day After Christmas Boom

What a day! The market opened higher and most stocks retraced to Monday's lows

before taking off higher. I made a profit higher than what I lost on Monday, but failed to wait for the right time to buy and I sold around noon instead of expecting the run to last the whole day which is typical for Wednesday off of an over sold condition.

I didn't trade Alphabet (GOOGL) today, but I did use it for reference as it was one of the only stocks that did not go down to retest Monday's lows. I bought call options on Boeing, Tesla and Netflix on the way down. I was down bad by the time it changed and went higher. I ended up selling everything around 12:30 pm and missed out on the other half of the gains for the day. I made charts on each company below.

I would expect to see more upward movement on Thursday with some pull back for the second half of the day and it should give back half of today's gain. I hope I am wrong, but I will trade carefully tomorrow. Check out my market commentary below along with my favorite pick for 2019.

Amazon, Alphabet and Intel... Oh my!!!

Tesla reported a blow out quarter and I believe it should be trading closer to $420/share now, but we



have too much Geo-Political risk the market is dealing with as they have proven relevant on earnings calls whether it is stated or not. Amazon also reported its best quarter ever Thursday night and went down 10% due to a miss on the revenue. Alphabet reported earnings that were near Apple's last quarter's numbers, but also missed on revenue versus expectations. I think it is crazy to think that these companies should be punished due to a miss that doesn't really account for much since they are still growing and increasing their earnings per share.

Intel had a great earnings report which was expected since AMD did not. I don't know if it matters as we are facing increasing interest rates along with higher import cost due to tariffs. We are also on the edge of a mid term election where Democrats are expected to play a bigger role in the House of Representatives. If that happens, expect more time wasted as they will try to reverse the tax cuts instead of working on new things. The tax cut won't be reversed because President of Trump would not sign off on it and the Senate won't vote for a change either. What it does mean is bigger tax refunds for most families in the United States which will spur more vehicle and technology purchases. I believe Ford and Tesla are prime to explode to the upside for 2019.

Until then I think we may experience a little more downside before the market regains its feet and takes off to the upside. It feels similar to earlier in the year however the decline that started in late January was started by Amazon and Alphabet missing earnings. As they started moving up, we got the tariff news and moved everything back down. I think we are near the bottom of the market as the whole picture changes once the tariffs disappear regardless if the Federal Reserve slows down with the rate hikes or not.

Next week we will hear from Apple, Facebook and all of the other important companies that didn't report this week. I would expect to see everything to move up next week and even faster for the remainder of the year.

Separation of FANG

Netflix had a great earnings report Tuesday afternoon and it shot up after the Bell on Tuesday and went straight down after that. It opened Wednesday morning at $380, dipped down to 356 before finishing around 365. It went further down on Thursday and even further on Friday as Disney hit a new 52 week high that is near it's all time high based on belief that Disney will take market share from Netflix moving forward. Alphabet and Amazon traded down but for the most part Alphabet and Facebook finished the week flat while Netflix and Amazon experienced more negative effects due to their high valuation.

Trading Alphabet (GOOGL) options were interesting on Friday as it looked very similar to the prior Friday. Alphabet opened up and went up to 1121 by 10:05am before going down to 1098. It went back up to 1110 and back down to 1097 before finishing the day at 1105. It didn't have the big late day run like last Friday and is why I say that you can't trade expecting a huge Friday afternoon movement or you will get burned more times than not.

Options will be very expensive for Amazon and Alphabet because they report earnings after the bell on Thursday. Like Netflix  their earnings should be great and they will go up huge and sell off the whole day on Friday.

I did take advantage of the sold off Friday position of Tesla to buy a 360 Call for next week when it was at 354. I hope to get a nice move up on Monday or I will be selling quickly.

On Tuesday Verizon will report third quarter earnings before the market opens and as usual it will be great and benefit from not having any tariff exposure or declining media business because they are not trying to be in a low profit market like AT&T which reports Wednesday. It would be nice if AT&T has something good to report. Either way Verizon should be up more which is never the case as AT&T drags Verizon down with it. I would like to see Verizon and AT&T to act like PayPal and Ebay as PayPal had great earnings report and Ebay went in the opposite direction on PayPal highs.

Boeing reports earnings Wednesday morning and they should be excellent as long as they don't have anything to say about tariffs. As with almost every company that has reported earnings, I find that if they have great earnings and go up big, they will sell off that next trading session. If the market does not like the earnings, the shares will go further down in the next couple of market sessions. Either way it appears best to buy Put options in the first couple of minutes after the market opens after earnings are reported. Based on that stance it sounds like we are in a bear market. I don't believe that is the case as positive market movement is based on less than 30 days in a year. That is what history says  but the down days extend into multiple sessions while positive movement occurs in a day and doesn't appear to move as much as the sum of the down days. 

Netflix and Chilled, Interest Rates and Market Correction

Netflix reported a blow out 3rd quarter Tuesday afternoon. The stock rose as high as $400 before

settling around $385 and then opened Wednesday morning at $380. From there it went down along with FANG. Facebook, Amazon, and Alphabet found a bottom earlier than Netflix. Netflix found it's bottom around 355 before moving up for the afternoon. I like to see if that number will hold, but so far on Thursday is barely hanging on. Alphabet bottomed at 1115 which should be a key point to pay attention to on Thursday.

Today Alphabet opened higher at 1130 and went straight down to 1114 before bouncing up and then retesting that level at which I bought Call Options and it didn't hold as it went down to 1110. Much of the downward movement in stocks is due to the Federal Reserve minutes noting they still expect to raise interest rates 3 more times next year in addition to again in December. Rising interest rates is what Trump expects will kill the economy and he is right.

Higher interest rates cost all businesses more. Businesses finance expansion with the issuance of debt and small businesses may use debt to help with daily cash flow. Start up businesses may utilize debt to help establish themselves. Consumers use loans to purchase vehicles, homes and luxury items. If the businesses are being squeezed and the consumers have less desire to purchase higher end items, everyone loses, not just the housing sector.

The housing sector has extra constrains between higher material cost along with higher rates consumers have to pay for the mortgage loans. I believe the ultimate problem is the housing sector got fat and greedy from low interest rates for so long. Because interest rates were so low, people wanted larger houses that are larger than what they actually need. Where are they building homes for the average family? It isn't in Orlando, Florida.

Moving forward, Americans are going to have some of the largest tax refunds at the beginning of 2019. Housing may benefit some but with higher interest rates, not as much that will make a difference for the long term. People buy cars when they get big tax refunds regardless of the interest rates so I think Ford is positioning themselves to be the best along with Tesla. I think with Ford and Tesla at their 52 week lows they are a value and a growth buy for 2019 and investors will be happy by August of 2019.

Tesla or Bust

Elon Musk of Tesla makes for some interesting news. Last Thursday after the market closed, the SEC had a conference that they were filing a lawsuit against Elon Musk for market manipulation with his Tweet on August 7th when he stated that he is considering taking the company private at $420/share. From that Tweet the stock shot up from 340 to 380 that afternoon. I said it when it happened that it doesn't make sense and he will have legal problems that will probably include jail time if it doesn't go through.

A couple of weeks later Musk Tweeted that he would not take the company private because so many people would prefer he did not. The stock went down to 252 and bounced to make it to 318. Once the SEC made there announcement, Tesla's stock fell hard after hours and finished last Friday at 362. We learned that the SEC offered a settlement to Musk who refused it. Over the weekend we learned that Musk and Tesla made the settlement deal and the stock erased Friday's drop completely.

After erasing Friday's drop, Tuesday Tesla announced their delivery numbers which were a huge increase from past performance. Tesla's stock moved up at open and moved down for the rest of the day. Then today we found that Musk threatened the board not to make the deal or he would quit. Tesla's stock has continued to move down on Wednesday and bottomed for the day around 292.

What we have learned is that when Tesla is down real low on Friday, buy a Call Option for the next week and you will be happy by Monday afternoon. Next up for Tesla will be their earnings report. If they turned a profit in the third quarter of 2018, we might see Tesla hit that $420/share mark.

Upward Moving Market

Tesla appeared to have bottomed last week after their newly hired accountant left and Apple appeared to have a short term bottom last Thursday as it did not go below 217. This presented a huge opportunity to capitalize on this movement back up. I don't believe that Apple will react positively to the new iPhone announcement on Wednesday, but you could have made some nice profits from Thursday to Tuesday with Call Options. Apple could go higher and pass it's all time high recently established, but think it will be resistance first.

I took advantage of Boeing opening on Tuesday below 340 as it went to 337 and bounced off of it. Boeing moved up to 346 which made for nice profits in one day on Call Options.

Alphabet (GOOGL) opened lower Tuesday and dropped to 1166 where it bounced off and moved up to 1188 very quickly in the first hour of trading. Alphabet moved down while Amazon continued moving up. Alphabet bounced off 1180 to go higher and touched 1190. Those were 2 nice movements that could be profitable as this is what I call an up week for technology stocks as last week was down. 

Thursday and Friday Market Movement

This past week was a busy week for the end of August. Amazon is still moving to new highs along with Apple despite Netflix cutting off the Apple Store's cut of Netflix subscriptions. There are still more tariff talks as we ironed out a deal with Mexico, Canada is pushing for a deal next. Tesla has continued to move down as Elon Musk has left the headlines and other auto manufacturers are entering the electric auto space. 

Alphabet (GOOGL) had a nice move up this past week. It peaked out around 1269 which was a surprise that it went up on Thursday given that it started the day down. It fell back to 1260, came back up to 1266 and was in free fall mode until 2pm on Friday. I bought 3 1260 Puts on when it was at 1265 and sold it too soon at 1258. If I sold them on Friday at the low of 1225, I would have multiplied my money by 7. 

So that sounds good and you might say let's do that the next time it goes up. Typically Alphabet has a great week ending with a fall in the last day and a half. The next week it starts down with a bottom found on Monday. The bottom is retested on Tuesday and again on Wednesday. By 2pm on Wednesday the bottom is in and you could feel comfortable buying Calls for the end of the week. If the move is huge on Thursday without a pull back, Friday could be a similar sell off day. If Friday is an up day, buy Call options for the next week. If it is not an up day, buy Call options near the bottom at the end of the day.

Given how much Apple has run and their new iPhone announcement, I would expect to see it pull back some before moving higher. I am looking for it to come down to 222 before buying Call Options a week or two out.

Movement to Profit

Most stocks opened higher this morning with the exception to Alphabet (GOOGL) which was targeted by President Trump before the market opened because he was not happy with the "fake news" he found when he Googled himself. I guess he doesn't understand that Google includes what you are interested in the search.

It fell so quickly and bounced from it's morning bottom that it would have been difficult to profit from Put Options this morning. It did bounce off 1246 which is $10 lower than Monday's close. That is where you could have bought a Call Option and sold it around 11am when it came close to even for the day. Unfortunately this was the only good move to trade based on the indicators.

Best Buy reported earnings around 7am this morning and it beat all of the numbers analysts were expecting, but it quickly traded down due to a lower forecast for the current quarter. Best Buy did raise their forecast estimates for the year which appeared to be ignored.

Best Buy popped early and sank quickly. It appeared to have bottomed at $75. Based on the last earnings report, it went down further the 2nd day after reporting earnings. I believe that it might not go lower tomorrow because the earnings report was so good.

I would like to buy Call Options 3 weeks out once the bottom is secure. As we saw with Alibaba retested it's bottom the 2nd day after earnings last week, it moved up and opened at 182 today but sank hard after that. I don't believe in Alibaba like I do with Best Buy so I would expect Best Buy will retest it's recent all time highs in the next couple of weeks.

Tesla went down from open and bottomed quickly at 311, ran up to 317 and down for the rest of the day finishing at 311. I just saw one good Call Option trade that made sense.

Given that Amazon had a new high today, I would expect to see more upward movement tomorrow if we don't get another tariff bomb dropped by President Trump before the market opens. 

Friday and Monday Market Summary

China appears to be preparing for a trade meeting as they have stopped devaluing their currency. The market had some nice gains on Friday as many Chinese stocks bottomed and started moving up like Alibaba. Alibaba ran up after reporting earnings on Thursday and came down sharply 13 points. It opened around 175 on Friday, came down below 173 and finished by moving up that continued Monday when it passed 180. I picked up a September 17 dated call option with a strike price of 180 on Friday. I hope it breaks through to 187 by Thursday for me to sell it.

Alphabet (GOOGL) on Friday opened higher, moved up and back down near where it closed Thursday around 1221 then went up to 1234 and finished the day above 1236. Monday Alphabet moved similar to Friday when it opened around 1244, up to 1247, came down to 1241 at 9:40am and ran up for the rest of the day. I have Friday's chart to the right and Monday's right under it.

I mentioned over a week ago that Twitter looked like a great deal under $33. It went down to $32.35 and has been up since as it closed today above $35 on it's way to 42.

Ford moved up since Thursday as it touched $10/share again today with the news about the Mexican trade agreement. Tesla moved sharply lower today but settled the day just under Friday's closing price. Analysts are saying what I said a while ago about Elon Musk should worry about making cars and hire someone to handle the public. I also said that Tesla should remain public and now Musk agrees as he posted on his blog Friday evening.

Profit from Ups and Downs of the Market

I have not posted anything in a week as I tried a different method to trade that didn't work. I felt that Alphabet (GOOGL) came off of the bottom last Friday and was going up starting Monday. It went up to 1224 and down from there. It didn't go as low as Friday's low of 1204, but did have a nice run up. I decided to hold on my options for a couple of days because I felt that it was going to 1240 and would open higher by 10 on its way.

Tuesday came and it ran up to 1232 and fell from there never to return until today. When it ran up to its peak on Tuesday, the S&P 500 index was about to pass the all time high from January. Alphabet's indicators were at the very top for over a half hour which indicates that it would probably go down. I expected a small drop followed by a push higher. I was wrong. As Tuesday ended, everything fell going into the close with the Trump associates guilty rulings.

On Wednesday Alphabet opened around 1215, ran up to 1226 and fell to 1218 never passing 1223 in the afternoon. I sold my Call Options that I held since Monday for slightly less than I bought them for although the stock price was 10 higher than when I bought the options. This is why I don't like holding options over night and you should expect to have them sold in less than 45 minutes unless holding on to longer dated options.

If I had not been tied up with the Alphabet options I would have taken advantage of lower cost options for stocks that came off of a recent peak that were due to go higher for example:

• Spotify was 194, came down to 185 and today is back above 191.
• Roku was near 60, came down to 55, now back to 62
• Apple was near 218 on Friday, came down to 214, and now back to 216.

Nvidia fell last Friday from the disappointing earnings report due to only receiving $18 million instead of $100 million from crypto currency mining. It tried to recover Friday before falling back to the after hours low of 242. This week it has run up to an all time high of 269. This is a stock that is strong, but streaky. I have tried to trade options on it before with such small success.

Tesla might have turned a corner as "the most shorted stock in the history of the market" according to Elon Musk. The reports of Musk health concerns drove Tesla's stock down from 305 to 283 in premarket trading on Monday. It opened around 290 and finished the day at 308. From there it has moved up to 327, but has stayed around 321. Tesla has positive news for deliveries and negative news about a car hitting an object then catching on fire. This week it is stayed consistent.

Outside the initial movement in the morning, there is not a lot of movement as it appears that the market is waiting for something. Tariff news is increasing with more planned tariffs on China and anticipation for a meeting with the leaders of China to work out a trade agreement. One thing is sure is it could take an hour for a stock to peak and in 20 minutes go back to where it started. 

Day trading this market can still make a lot of money as long as you know your stock. Alphabet (GOOGL) typically moves 10 to 12 from the prior close or the morning open. It goes up and down that far. Home Depot, Best Buy and Apple have moved 2 to 4 points in either direction each day. With the stagnate market this feels similar to a type of bear market beginning. As we come to the end of the 2nd quarter earning reports, we might see more of the same. Maybe not as Amazon came close to hitting another all time high this morning. 

How to Make Patients Pay Off Today

I am a big advocate for studying one or two stocks that have decent daily price movement to trade options daily. I follow Alphabet (GOOGL) closely and understand its tendencies. Similar tendencies can be found in other stocks, but I am comfortable with it's tendencies for trading.

Today it opened higher than Monday's closing price, but Monday it broke below the 1249 level that held the week of Alphabet's 2nd quarter earnings. I expected it to go down initially today and roar upwards after it finds a bottom. It closed Monday slightly below 1249, but opened at 1252 and pointed down quickly. It was so quick that it didn't come back to where it started the way I like to typically jump into a trade. It did find a bottom at 1240 where it retested a couple of minutes after 10am which made it perfect to buy Call Options.

Unfortunately I was influenced by last Tuesday's movement where it opened 10 higher and went higher right off the bat so I bought my Call Options too soon. Rather than sell at a loss, I decided to wait for the turn. The only problem with waiting is that what I paid for the Call Options when Alphabet was trading at 1252 I had to wait for it to get to 1256. I sold up slightly due to lack of discipline for not waiting for the bottom. This would not work well on Thursday or Friday as it doesn't have that kind of change in direction most of the time.

When there is a big drop with Alphabet, it moves in $10 to $12 peaks. What I mean is that it opened at 1252 and bottom at 1240. It closed yesterday at 1248 and peaked at 1260 although the tradable peak was 1258. Therefore you can use the price movement of the stock to measure good times to take profit it is in an extended overbought or oversold state based on the stochastic indicators.

In other news, Home Depot had a blow out quarter report before the market opened and it went up in the premarket trading and fell sharply during the market session  This stock will go up over the next couple of days as long as Macy's and Walmart don't disappoint over the next couple of days. 

Macy's hit a new 52 week high today. I find that when a company runs up before reporting earnings, it receives too high of expectations and will sell off after the report no matter if the earnings is good. With it running like this, I bought a Put for protection on the downside and expect to buy a Call Option after it finds a bottom if the report is good. Nvidia is following a similar pattern, but the problem is their options sell at a hefty premium and the report is due after the market is closed on Thursday which doesn't give you time to anticipate the direction. 

Tesla appears to be losing stream after last week's Tweet by Elon Musk about going private with the company stock. I feel it is going to be in a tight Trading range Unless we get some market altering news. 

Amazon and Apple Go Higher and then...

Amazon and Apple went broke out to new highs this morning while Netflix opened lower due to the CFO leaving the company. Netflix did rise with the rest of FANG before coming down with FANG for the rest of the day after 11am. Tesla opened higher and traded down until it reversed when it got around 350/share. I believe Tesla will move up this week, but find it hard to believe that the company will go private at $420/share. I think $400 is more likely to be the go private price, but either way it is higher than where it is at and is why I will hold a small amount of shares in my portfolio.

Alphabet (GOOGL) opened up, came back to 1252 in the first couple of minutes and that is where I bought my Call Option and sold just after 10:30am for a nice profit. It came down to 1252 where I bought another Call Option with a higher 10 strike price and ended up selling it when it didn't appear that Alphabet was going much past 1254. It did trade down for the afternoon. Tomorrow might be similar to today. I like taking my profit when it goes up about 12 higher than where it starts when it starts flat. See my chart:

Friday Pull Back to Profit

Amazon and other tech companies were up big this week and today was not much different than other Friday's where they would give back some of the gains for the week. Alphabet (GOOGL) ended slightly lower than where it ended last week. I would expect more give back on Monday.

LEARNING LESSON: On a down day, take your profit and look for another opportunity to take a profit in the same direction. Don't get excited about it changing directions completely as that doesn't happen often and many times it just returns to where it starts.




Tesla had some after hours movement Thursday from news that the board will pursue hiring a financial analyst to determine the valuation of the company to move the process forward for Elon Musk desire to make Tesla private. By open Friday it gave back the after hour gains and then some, but did charge higher and ultimately ended the day even.

LEARNING LESSON: Try to avoid after hours momentum as it can be reversed the next day and is often wrong. Instead look to buy at the best price during open trading market hours.

Example: Sunrun was driven down below $12/share after reporting earnings Thursday afternoon. It finished after hours trading around $12.67. It fell to $11.80 after open Friday morning and moved up nicely a dollar from there. This stock is loved by solar customers and employees of Sunrun and the numbers were good except for the earnings per share which was due to an accounting change. If the numbers look good and the price action is not, look to see if there is poor guidance given on the conference call. If it is clear then it is obvious that the after hours traders are wrong and you will get a rebound the next day. Macy's is a perfect example of this after their first quarter earnings call.

Apple opened lower today and moved up quickly. This appears to be a common theme as they stay closing above the trillion dollar amount of $207.,7.

Tariffs are working so well that... Who knows what will happen next week. Home Depot, Walmart, Macy's and other retail companies are reporting next week. Happy trading.

Amazon New High and Tesla Grounded

Amazon hit another new high today as it pushed through $1900 as it pushed higher with news of a new clinic option. Boeing and Ford went lower along with Tesla. The Tweet that Elon Musk pushed out appears to be a myth until there is proof. I am sure there will be a new Tweet over the weekend that will drive it up next week.

Alphabet (GOOGL) moved up, came down below the start and then higher. As the Samsung Unpacked event displayed Samsung’s new smart speaker it dropped quickly to 1262 and bounced higher. As a Samsung user and a Google Home user, I would not switch to Samsung to use Bixby as I hate Bixby. The best time to buy Call Options showed when the price dropped but the stochastic indicator did not come down as far. It was also very close to where it opened today also. Check out the chart.

Sonos fell further as they are getting closer to their IPO price. CNBC's Jim Crammer smashed Sonos for sharing a dismissal outlook after their IPO. Spotify had a huge jump once they were announced as a partner with Samsung at today's event. I jumped in midway up on some calls and sold them within 5 minutes for a decent profit.

Roku reported earnings Wednesday after market close and they broke even for the 2nd quarter which was better than the lose analyst were expecting them to report. I made money on the IPO release last fall and I saw this was so low a few months ago that it was close to it's opening week around $30/share. I love our Roku televisions and thought this is one to buy and hold. Unfortunately I wanted to get dividends instead of growth so I sold a Call on it and couldn't afford to buy it back as it moved up above $40 that week. It will go higher as they are trying to expand their channel to be used without the need for a Roku device.

Everything is up so much this week that it might be crazy to think that it will continue tomorrow. I would expect a big pull back on Friday but could be wrong. 

Elon Musk and Tesla Dream

Elon Musk appears to be settling himself and the company up for the biggest disaster possible with his recent Tweets about taking Tesla private. Tesla has struggled to make production goals for quite some time and has failed to make a profit for years. As the demand has increased, Tesla has failed to make enough vehicles in a timely fashion to meet the demand.

Tesla's failure to meet demand and success in creating a wonderful vehicle has created opportunities for other high end auto makers to meet the needs of customers. Porsche, Volvo, BMW and other automotive companies have produced electric and hybrid vehicles that Tesla customers migrate to because they don't have the patience to wait 3 to 18 months to buy a vehicle. Tesla has failed also to perfect self driving in their vehicles when Nissan and others have employed radar to detect stopped objects for a few years. Tesla makes their cars upgradable, but they are about to be passed up by Google’s Waymo.

Tesla might not have too many improvements to make to their vehicles, but increasing production to achieve economies of scale should be the ultimate goal. Possibly Musk could argue that is what they are trying to do with new factories in China and Europe. Tesla increasing production is the most important thing the company must improve. By Tesla operating as a public company it has a public responsibility to shareholders to produce products as the most efficient way.

Elon Musk expects to run Tesla more efficiently as a private company doesn't make sense as they are in a completely different business than Space X which he says runs very well. Space X might be efficient launching a rocket once a month, but it is a business that must focus on efficiency rather than law of large numbers like a struggling car company must accomplish. Thankfully running Space X allows Musk the ability to generate income that he can back Tesla financially although he states they will continue to operate as separate entities.

Keeping Tesla separate is a good thing, but many people want to see Tesla succeed and if Musk wants to take the company private, many have expressed desire to get more than the $420/share price Musk Tweeted yesterday. That is a lot of money and based on that fact alone Tesla should be trading above $400/share. To accomplish the buy out would be a complete waste as the company has a large amount of debt obligations and is burning through cash. If Musk has enough cash to take the company private, he should use it to focus on making the company better and buyers will buy it and short sellers will be burned.

Elon Musk is too concerned with short sellers as I am sure his employees do not go to work wondering if the stock is going down big today. Short sellers do not have anything to do with the production of Tesla products. Improvements to the Tesla brand and increased production should be the only thing that Elon Musk should desire for Tesla. If he doesn't like answering questions of doubters then he should have it handled through a PR team so it doesn't waste his time.

That is how Tesla could be great and loved by most.

Profiting From Options in Boeing, Apple, Alphabet and Tesla

Yesterday's run up in Tesla was huge but as I mentioned yesterday, if Elon Musk does not follow through, he will go to jail. I will follow up up on that in a separate blog later. Boeing was affected by more tariff talks this morning with China imposing more tariffs on US goods. It opened down, came up momentarily and that is where to buy a Put Option today.

Tesla opened lower, ran up quickly and then sold off from the 382 area. Tesla has a tendency of moving one direction and switching during the day. Here is the chart.

Apple opened below 107 so that is where you look for a bottom. The bottom was in around 105.30 and from there you should buy a 205 Call Option to hold or just make a quick profit if the expiration is for this week. You definitely would have made some good money with it.

Alphabet (GOOGL) was also a great way to make a profit from Call Options today. With Alphabet I have found that you wait to find the initial direction and buy an option for that direction when it comes back to the starting point. I saw it ran up to 1258 and come down to 1252 in the first couple of minutes. To me it appeared to go up, but I waited as it went up again and came back to 1256 where I bought 2 Call Options. When going up, I expect it to go around 12-14 points higher. With that in mind you can set a sell limit order and it should get hit typically around twice of what you paid for it.

Today Amazon hit a new high. I would expect Alphabet and Amazon to be higher tomorrow, but will wait for tomorrow to find out what is going on.

I showed 4 different stocks to make money on options, but I would recommend only using one or two at most when shirt term trading. 

Tesla Crazy, Market Movers to Profit

International markets have been down and were up last night which our markets took off from open. Apple moved down below 207 and Sonos moved below 19/share. Alphabet (GOOGL) opened higher and continued higher to 1265. When it opened above the 1249 mark it was a signal that it was going higher. It went to 1265, came back to 1256, back up and back down to finish at 1255. There was a definite trading pattern it followed today and the 2nd path was easier to read.

Tesla was trading around 342 when it suddenly shot up with news of Saudi Sovereign Wealth Fund investment of $2 billion along with a Tweet by Elon Musk saying that he wants to take the company private at $420/share. Trading stopped at 2:45pm for an hour due to pending news. Musk later Tweeted that funding is secured pending a shareholder vote.

Elon Musk of Tesla is backing himself into a corner. By Tweeting his intention to take Tesla private to bust short sellers might blow up in his face. At this point he will have to make it fully public that they will purchase shares back at $420/share or go to jail for market manipulation. If he gets goes to jail, Tesla will go to zero. Buying a long dated option might be a good idea but could also turn to crap.

The real story will come out in the next couple of days and it will go up to $420 or will go down past $300/share.