On Friday, Mike outlined a trade for TSLA, who announces earnings on August 2nd, 2017. TSLA closed the week at $334.46 on Friday, 15.7% lower than the all-time high of $386.99. Options traders are expecting a 7.2% move when the company announces Q2 2017 earnings. This move is above the 5.5% average from the past 8 announcements. A $4 billion shift in Market Cap, is absolutely the biggest shift in TSLA earnings announcement history.
Going into the Q2-2017 earnings announcement, TSLA is setting up expectations that might not be met. The optimism, around the Model 3 release to customers on Friday, could dissipate after the earnings due to the actual total delivery number of Telsa cars this year. The Model 3 could put a drag on Model S sales, which could reduce the top line revenue in future announcements. Production expectations of 112k to 115K total vehicle deliverable by the end of FY 2017 that might not be met, would have investors looking at the cash burn rate instead. However, the Solar City aspect of TSLA does bring in revenue that could hamper the Bears conviction after the announcement. It is also noteworthy that there is a big short interest on TSLA and when the stock drops, there will be covering, which builds in a support level that traders can exploit.
Source: ThinkorSwim.
Here is the Trade Idea: Look to the August 335 / 310 1 X 2 Put Spread. Buy 1 August 17 335 Put for 14.90 and Sell 2 Aug 17 310 puts at 6.20 for a net debit of 2.50 for a put spread that is $25 (7.5%) wide. You will not see losses unless TSLA drops through the 287.50 level. OptionsPlay.com gives this Trade a score of 250 and a Probability of profit at 38.38%.
