Big Picture Update: Collapse Pending The stock market remains precariously close to a Wave 3 breakdown that has enormous potential, actually, historic is the better adjective here. The series of first and second waves that have been unfolding for much of 2022 continues as a compelling lead-in to a summer (read: August) stock market meltdown. Under this scenario the payoff on our Aug/Sep puts will be massive. Stock Market SPX 180 Minute Trend Model - On the cusp of a Wave 3 breakdown IYR 4 hour Trend Model - Sep 16th $100P = Best bet on the board TSLA On Aug 4, 2022 Tesla shareholders will vote on a proposed 3:1 stock split. The last time TSLA split was in August, 2020 and at that time the six-week run-up to the split had shares rise about 65%. Will history repeat? Not likely in the above-referenced stock market meltdown, but, if there is no market collapse, or it is delayed, or if TSLA is above the fray, than maybe we should know what a 65% run-up takes TSLA in the next six weeks. I've done the math: $1,347.60. That values the $1,200C at a minimum of $13,476, no matter when the expiration. TSLA Call Strategy TSLA has three bullish engines revving right now: (1) Stellar earnings report; (2) upcoming stock split; (3) owns the EV Sector (and EV sector owns global transportation). But it is also up against a macro market crash scenario that just won't go away, which suggests a, "Pairs Trade," positioning of TSLA calls of short-intermediate-long term expirations against our existing and/or add-on stock index puts (Aug/Sep expiration). Below are screenshots of my three favorite TSLA calls for trading the stock split and/or in the case of Nov/Jan expiration, a bounce back rally after a bear market event. Note that the third listed call, Jan 20 2023 $1,200 is priced at $3,500, which is our "good luck" pricing of the Jan 2021 $420C that returned 11,000% between Dec 2019 - Jan 2021. Just saying. TSLA Nov 18 2022 $1,200C* TSLA Sep 16 2022 $1200C* TSLA Jan 20 2023 $1200C* *Buying TSLA calls based on the theory that it will repeat the gains generated on a previous stock split is an exercise in pure gambling. The reward if right is large enough to merit a modest bet, but is in no way a "sure thing." Blue Line Subscribers know this by now, that we have a tendency to be both right and wrong on our trades and any one trade has about an equal probability of being either. TSLA was at $696 at the time of the stock split announcement, and closed Friday at $816, already up 17%. Nonetheless, that was a blockbuster earnings report on Wednesday, and I could have added, "(4) Cybertruck still pending" to the bullish bullet points above, but really, is it even necessary to justify $1,347.60? Cybertruck will be a part of the $3 trillion market cap discussion, coming later this year and we will be buying 2024 LEAPS for that one. For now, we own Tesla shares and 2023/2024 calls for the long term, while the $1,200 calls above are a purely a short-term split trade made in the face of a hurricane-west-wind market crash risk scenario.
