Trading Tesla Bullishly with Options Now that Musk’s Pay Controversy is Behind Us

Elon Musk, the CEO of Tesla, kicked off the annual meeting on Thursday by thanking shareholders. Shareholders voted to reinstate his $56 billion pay package, which was voided earlier this year. The issue led to the company changing its state of incorporation from Delaware to Texas. With this uncertainty now behind them, there is a bullish view on Tesla. Despite being a high beta stock and facing challenges this year, the stock has the potential for a turnaround now that the Musk commitment uncertainty has been mitigated.

Tesla’s stock has been volatile this year with Musk running multiple companies. Despite being a laggard in the market, analysts like Cathie Wood have a bullish outlook on the company, predicting a value of $2,600 per share by 2029. The $56 billion pay package, initially approved in 2018, was a point of contention this year, raising doubts about Musk’s future with Tesla. He expressed the need for a 25% stake in the company to control the use of artificial intelligence, further adding to the uncertainty.

When emotions run high in a stock, it is essential to use technical analysis for trade construction. The 50-day and 200-day moving averages indicate short-term support and resistance levels for Tesla. One trading strategy could involve buying a TSLA $190 call and selling a TSLA $215 call for a call spread cost of $4.80. This strategy allows for potential gains as Tesla historically fluctuates around key milestones. It is crucial to stay nimble and monitor the market closely.

Disclosure: The author of the article is long Tesla and has initiated the call spread trade mentioned above. The content provided is for informational purposes only and should not be considered financial, investment, tax, or legal advice. It is general in nature and may not be suitable for individual circumstances. Before making any financial decisions, it is recommended to seek advice from a financial or investment advisor. The full disclaimer can be found by clicking on the link provided.

In conclusion, with the uncertainty surrounding Elon Musk’s pay package now resolved, Tesla has the potential for a positive turnaround in the stock market. Despite facing challenges and being a laggard in the market, there is a bullish view on the company’s future. Utilizing technical analysis and trading strategies can help navigate the volatile market conditions and potentially capitalize on the opportunities presented. It is crucial for investors to stay informed and seek professional advice before making any financial decisions.