The Big Picture As pleased as I am about the TSLA run up this month (+20% since Memorial Day), something doesn't feel quite right about Mr. Market (he/him/she/her/it/them/whatever). More on that in the second half of this weekend's missive. TSLA Daily Trend Model For now, we have some stellar gains in TSLA calls to review, as much as +615% in PRO positions and +500% in Premium Service positions. The option table embedded in the Daily Trend Model below captured the gains in the Premium Service for both TSLA calls recommended this spring, in late March and early May. Keep all calls on 50% trailing stops - for example best price level divided by 2 or best percent gain level divided by 2. As set out in a special Alert to the PRO Service on Friday, attentive traders can also use the trend model signal line as the trailing stop, exiting on a close below the indicated signal line. Key point here: If the market tanks and decides to take TSLA with it, we have an exit point to preserve at least half our very substantial gains. Fear & Greed Index - Into The Danger Zone Complacency & Opportunity Below is a quote from the Elliott Wave International from their Short-Term Update service sent out to their subscribers Thursday night concerning the steep oversold condition of VIX: Let me repeat for emphasis: "[In February 2020] the VIX went from 13.38 on February 14 to 85.47 on March 18. No one thinks the same is even remotely possible now." VIX Sep Calls That's 103 days to expiration and that $30C, in a repeat of 2020, would run up into the mid-50's, an approximate 50X increase in value. For every $125 put into one of these calls, the run up from VIX 13 to VIX 80 would turn $125 into $6,250, minimum. $500 would become $25,000. $5,000 becomes $250,000 and dare I say it, $10,000 becomes $500,000. Let's look at it another way. One TSLA Sep 15 $200C that you paid about $1,000 for on May 5th, is now worth $5,570. If you sold that call now and put the proceeds into VIX Sep $30C @ $125 each and in the next 100 days VIX spiked liked it did in 2020, the proceeds from those two transactions would then grow to be worth $278,500. That's taking $1,000 and turning it into $278,000 on basically two trades and, in one sense, we are already half-way there. Strategy Based on the extreme level of the F&G Index and the historical precedent set in the early months of 2020, we are back on VIX watch. Stand-by for further instructions, or, buy a fist full of the VIX Sep 20th $30C now, pending a better reason to buy than pure unadulterated greed. If for whatever reason TSLA calls are stopped out, expect to be going long VIX Sep calls, if we are not already all-in.
