If you could create your dream portfolio, I bet that I could guess the top stocks that you’d be banking on to hand you your nest egg — Netflix (NASDAQ: NFLX), Amazon.com, Inc. (NASDAQ: AMZN), Facebook Inc. (NASDAQ: FB), Google (NASDAQ: GOOGL).
These are the biggest stocks in the world, and they all have one major thing in common…
They’re expensive.
GOOGL is currently trading for $1,489 per share, and AMZN is sitting at $3,000 a share!
And for most traders, it’s just not worth it to see gains of 10%, 15%, or 20%.
But I have news for you… it’s possible to rent these high-fliers for pennies on the dollar and double your money. And it’s much faster than buying the stock and waiting for years.
Today, I’m going to show you how to do just that with a jewel of the car industry… and by jewel, I mean a serious profit player.
This company shot up 42% in the past week. (And this is one of the fastest ways to bank a potential profit on the upside.)
Here are four strategies to play this lucrative stock, each one better than the next…
Four Ways to Profit on This Automotive Stock for Pennies on the Dollar
Today, we’re talking Tesla Inc. (NASDAQ: TSLA).
As you know, I am a big, big fan of this car brand. In fact, I own two myself! I owe it all to that Model S, since it’s the car that got my family and me safely out of Hurricane Irma’s path.
After the company’s IPO launch back on June 29, 2010, where shares were just $17, TSLA is now trading at all-time highs of $1,429.50.
This 10-year old company grew 242% in 2020 and is now the largest U.S. car manufacturer with a $254.5 billion market cap.
TSLA just blew second quarter expectations out of the water, and the news kicked off a dramatic five-day rise. And it’s set to go even further on the upside.
In the graph below, you can see the traction that TSLA has gained since its year-to-date low in mid-March to the all-time highs we’re currently seeing.
Below, I am going to break down three different ways to play this lucrative stock… and double your money.
First, let’s break down a stock purchase.
- Long Stock
At $1,429 a share, you’ll need $142,900 to buy 100 shares of TSLA. You’d make $100 for every $1 that TSLA rises, but you would lose $100 for every $1 that the stock price goes down. Seems a little chancy, doesn’t it?
Let’s take a look at just how risky it is.
The risk graph above reveals unlimited profit and unlimited risk. It is possible for
TSLA to drop to $0, but it is not likely.
For you to double your money, the stock will need to rise to $2,858.
Now, let’s reduce the cost, essentially renting the TSLA “house” for a fraction of the price, which could double your money much faster.
- Long Call
A call option gives you the right to buy an underlying asset for a set price (strike price) by a set time (expiration date) in the future. Call options rise in value along with the underlying asset and vice versa.
For example, you can “rent” the TSLA house by buying a TSLA September 18, 2020 $1450 Call option for $207 per share controlled. At 100 shares controlled, this option would cost you $20,700 – a fraction of the $142,900 it would cost you to buy 100 shares of the stock.
This call option essentially allows you to rent TSLA until September 18, 2020.
Let’s take a look at the risk chart…
This trade provides an unlimited profit potential with a lot less risk than the long stock. The best part is that the call option will double your money if
TSLA only rises 32.4% to $1,864.
And with our third opportunity, it gets even better…
We can actually generate income with our long call, reduce risk, and greatly reduce the distance the stock needs to rise to double your money. If buying a call is like renting the stock, a long call spread is like renting and subletting the stock.
- Long Call Spread
Selling a TSLA September 18, 2020 $1470 Call will bring in $199 a share, reducing our entry cost for a bullish trade on TSLA to a measly $8 per share controlled, or $800 in total.
That’s right… you can essentially rent $142,900 of TSLA for only $800.
Here’s how this long call spread breaks down:
The long TSLA September 18 $1450 Call gives you the right to buy the stock for $1450.
The short TSLA September 18 $1470 Call gives you the obligation to sell the stock for $1470.
The best thing that could happen is for the stock to rise about $1470 at which point you achieve maximum profit of $1200, a potential 150% profit on this trade.
Now, let’s get to the risk chart.
Now, here’s the best part – although the long call spread has a cap on maximum profit of 150%, the percent to double is only 4.2% to $1466. That’s right… the stock only needs to rise by 4.2% by September 18 to double your money.
Given TSLA‘s meteoric run up in 2020, this opportunity has the chance to pay out big… and even sooner than you might think!
- Weeklies
The above strategies are great ways to score a profit on TSLA – but the fastest way?
That’s with weekly options.
Weekly options offer expirations at market every Friday. Because of their short time frame, they’re much more sensitive to the underlying security’s price movement – meaning they have an increased profit potential.
Especially when it comes to TSLA’s unrivaled speed!
In fact, since June 8, this group of readers has had the chance to take home six sets of profits by trading weeklies – and they all took just three days or less.
The sheer speed at which these options can produce profits rivals only the speed of flooring it in a Tesla Model S – it’s that fast.
And the best part? I send readers a new weekly option recommendation every single Monday.
To learn how you can receive my next one, just click here.
Talk soon,
Tom Gentile
America’s #1 Pattern Trader
