TSLA Intraday Trend Trade after Reversal off Double Bottom

Deborah Knighton1/14/2014

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No relevant positions

Please note: Hypothetical computer simulated performance results are believed to be accurately presented. However, they are not guaranteed as to accuracy or completeness and are subject to change without any notice. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Since, also, the trades have not actually been executed; the results may have been under or over compensated for the impact, if any, of certain market factors such as liquidity, slippage and commissions. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any portfolio will, or is likely to achieve profits or losses similar to those shown. All investments and trades carry risks.”

Big Picture

• After making an all time high on December 31st, the SPY consolidated for seven days then reversed lower yesterday moving it out of its consolidation box.

• Today the overseas markets were mixed in Asia and were trading slightly lower in Europe prior to the open.

• The futures were up this morning on better than expected retail sales and the SPY gapped up and continued to trend higher the rest of the day.

The Big PictureSPY reversed below the bottom of the box yesterday on above average volume

Trade Strategy

• Trade a reversal on a longer time frame• Wait for reversal confirmation to enter• Get lucky! (Positive news came out after

already in the trade)• Trade the intraday uptrend

Intraday Fundamentals

• TSLA trades with a Beta of 1.2, average volume of 10.6 million shares, and has an ATR of 7.4.

• TSLA has a short interest of 50.7%.• TSLA is ranked by IBD as #1 in the automotive sector and has a

grading of 72 78 97 C D D+. • There were recall rumors circulating in the morning that were

later clarified that is was for software updates, nothing to do with the fires.

• A headline that Tesla had 6900 car deliveries in Q4 caused the shares to pop.

• Elon Musk’s appearance on CNBC later helped propel TSLA shares even higher throughout the day.

Longer Term Technicals

Shorter Term TechnicalsOctober pivot low

Downtrend Channel

Intraday Technicals

News Pop

Double Bottom

Retrace and bounce off VWAP

After the news pop TSLA retraced back to VWAP where it caught a bounce, then trended up the rest of the day

Reading the Tape

• I was using options for these trades so I used the tape to get a general idea for where buyers were supporting the bid and where sellers were stepping in whenever TSLA was near a key support or resistance level.

• I noticed that TSLA put in a double bottom after selling off this morning, then traded up to the flat line where it consolidated just above VWAP.

• Today was pretty easy to read the tape due to the volatility and volume.

Trade Management

First Position using the Jan 24’14 139 Calls

1. Bought 1 Call for 4.70 at 11:152. Bought 1 Call for 5.22 at 11:213. Sold 1 Call for 4.91 at 11:244. Bought 1 Call for 4.85 at 11:275. Sold 1 Call for 8.40 at 11:446. Sold 1 Call for 11.18 at 11:48

6

5

4

32

1

Trade Management

Second Position using the Jan 17’14 142 Calls

1. Bought 1 Call for 4.55 at 12:122. Sold 1 Call for 5.18 at 12:19

2

1

Trade Management

Third Position using the Jan 24’14 150 Calls

1. Bought 1 Call for 3.50 at 12:212. Sold 1 Call for 4.97 at 12:37

2

1

Trade Management

Fourth Position using the Jan 17’14 155 Calls

After closing third position, I took some tie to chill, eat lunch, and watch a Playbook presentation until about 2:00

Missed this move

1. Bought 1 Call for 4.63 at 2:302. Sold 1 Call for 5.05 at 3:00

1 2

October pivot low

Trade Management

Fifth Position using the Jan 24’14 157.5 Calls

1. Bought 1 Call for 5.90 at 3:162. Sold 1 Call for 7.05 at 3:29

1

2

Trade Management

Summary of Intraday Involvement in Calls

October pivot low

9.5 points1.5 points

4 points

3 points

2 points

20 points total captured

Trade Review• I was very happy with my entries and exits today trading TSLA.• I struggled with whether the trades were going to be intraday only or

swing. I am content with my final decision to go flat TSLA at the end of the day.

• After giving up all my profits yesterday on my swing positions, today I was completly okay with missing out on some of the moves. There are plenty of trades out there and I am much less stressed when I am in the trade only when it is going the right way.

• I used two calls in the first position to scale in and out. Later I only used one call as the trades were basically momentum scalp trades.

• These trades are scalable. When my portfolio increases I can put more money at risk to enter the trades with more calls and add to the positions.