Earnings Beat – TSLA Trade Update #1

 

Market Context

Good day Insiders,

Tesla reporting horrendous earnings and the stock has since earnings released finally decided to decline. Recall that we had purchased a 250-225-195 put butterfly for protection on the downside in TSLA. At the time of this update, the stock is trading at 235 and change. Our put butterfly is looking quite profitable and though in a perfect world I would want to wait it out and see if we can indeed break below 230, there is no sense in ignoring profits that could dwindle away in the next few hours. We are going to close out our butterfly.

The Trade

Simply closing out the put butterfly here. 

Risk & Reward

Recall we used $5,000 in margin and in the event, TSLA did not move we had $488 in risk. Adding the margin to the cost of the trade gives us $5,488. The butterfly is bringing in a profit of $1,424 which when divided by $5,488 equates to a return of 25.9%