Hey, Profit Takeover team!
In case you missed it, yesterday I gave you my favorite trade idea of the week — long calls on Pfizer (NYSE: PFE), which initially looked ripe to generate the kind of asymmetric returns I’m hunting in this service.
However, after I issued my idea, it was announced the Biden administration is in favor of waiving coronavirus vaccine patent protections… Good news for other countries struggling to tame the pandemic, bad news for PFE shares.
Therefore, I am CLOSING my long Pfizer call options for $1.00 (remember — stock and option prices are fluid, so you may not see the same prices).
Obviously this wasn’t ideal, but it serves as a great lesson in trading: A stock’s story can change quickly, and sometimes you get caught on the wrong side of a trade.
There will always be losses, but it’s important to stay nimble and move on.
And since this one barely had a chance to breathe, I’m going to give you a BONUS TRADE early next week — stay tuned!
Today I want to talk about a bonafide Wall Street darling…
A company with a superstar CEO and a cult following…
And why that company’s stock could be in trouble…
Today I want to talk about… Tesla (NASDAQ: TSLA).
Specifically, why TSLA shares could get shaken up in the short term, even though Tesla earnings are in the rearview mirror.
Live from New York! It’s… Elon Musk?
In case you haven’t heard, Tesla CEO Elon Musk is hosting the iconic sketch show”Saturday Night Live” this weekend.
Musk is making waves in Manhattan already, with some cast members rumored to be outraged over the booking, due to some of his controversial positions on hot-button issues.
Others are allegedly throwing shade about Musk’s wealth, as he’s been battling with Amazon’s (NASDAQ:AMZN) Jeff Bezos for the title of Richest Person in the World.
Nevertheless, it appears Musk may not even need writers (said dripping with sarcasm); he’s been tossing out sketch ideas on Twitter:
@elonmusk has jokes on Twitter
The upcoming gig is also relatively rare in the sense that most “SNL“ hosts are performers of some kind — actors, comedians, musicians — with the occasional athlete sprinkled in.
You don’t see many sitting CEOs making weed jokes at midnight on broadcast television.
So, why does this matter?
Well, you don’t have to look too far to find evidence that Elon Musk’s behavior can move TSLA shares.
Need I remind you of this notorious gem from August 2018, that ultimately resulted in an ugly mess with the Securities and Exchange Commission (SEC)?
In a ruling in that case, one judge wrote, “The rise and fall of Tesla’s stock prices corroborated with the timing of the alleged false and misleading statements, all of which occurred within a less-than-two-week period, and which suggests Mr. Musk’s false statements were the proximate cause.”
And if that doesn’t convince you of Elon’s social media sway, consider that he was the fourth most influential Twitter handle in the WORLD in 2020, according to Brandwatch:
Elon tied with Katy Perry on the Brandwatch index
So, it’s almost certain that TSLA shareholders and cult members will be among the eyes tuning into “SNL“ this Saturday to see what Elon has to say, and the undertones of his monologue could certainly move the stock.
Will he take another swing at short sellers, like he did in May 2018?
Will he discuss the shareholder scrutiny over his insane compensation plan?
Or will he just smoke another blunt, like on the infamous Joe Rogan podcast?
Either way, while Elon is no stranger to weed jokes, TSLA stock itself is no stranger to volatility — especially lately.
From mid-April 2020 to late January 2021, Tesla’s market cap skyrocketed from $30 billion to $849 billion… only for TSLA stock to suffer the steepest six-week drop in value for any stock, ever into March.
What happens to TSLA shares after Elon’s performance this weekend, no one can say for sure…
But assuming his words will be under a microscope, as they usually are, one has to wonder if trouble will mark a top for TSLA.
Meanwhile, another stock with electric vehicle (EV) ties is attracting attention in the option pit today…
I Spy Impact Money
Here’s an unusually large option trade that crossed the tape this morning, pointing to potential institutional-level activity:
Click To Enlarge<
Unusual volume on FSR – Courtesy of Trade-Alert
EV maker Fisker (NYSE: FSR) is seeing hotter-than-usual call volume, which is running at twice the average daily pace today. The company is expected to report earnings soon, which could be why traders are circling the 13-strike calls in the weekly series expiring both this Friday and next.
By purchasing the calls to open, the buyers expect FSR shares — last seen around $11.31 to flirt with year-to-date lows — to rebound above $13 on the charts soon.
Again, this “impact money” is just one side of the two-factor authentication trading technique I’m looking for, so if FSR begins to trend on the retail side, I’ll be taking note.
Talk to you soon,
May 06 2021