On Friday, we discussed the macro/technical take in SPCE — which is shaping up to be the move of dreams. Is it the next TSLA? Maybe…
Richard Branson has quite a ways to go, as Virgin Galactic is a fresh IPO, but it’s definitely giving us moves like TSLA.
Here’s my analysis that has helped me compare it to TSLA…
Well, SPCE has just experienced two days in a row where it was up more than 20%, it has high short interest, and, I’ve been trading in and out of it, stacking my trades.
With TSLA, I used the Stacked Profits strategy, where I layer butterflies at multiple different expiration series and strike prices, targeting specific strikes. Did you ever notice how TSLA tends to close right at key psychological values each Friday?
This, in addition to the high short interest and expensive cost of the options, makes TSLA a great candidate for butterflies.
Here’s a 30 minute chart of TSLA today, where you can see the overnight gap higher, a move of about $58 — which is a 7% move.
I traded this one in my Stacked Profits Mastery program, and we took profits on half the position this morning. One of our members noted the trade made up the cost of the subscription.
“Danielle, my first TSLA trade helped me recoup my quarterly subscription. :)” — RajeshT
Why Stacked Butterflies?
With TSLA, I place out of the money butterflies because it gaps so frequently, meaning I can buy the butterfly for a pretty cheap price. On these butterflies, I purchased them for $4.45 per contract, selling half of the position for $9.92 — a nice double. I also sold some put credit spreads that I was able to take off for 90% profit on the move today.
Now, I compare TSLA to SPCE because of the macro level comparisons — they are both revolutionary, forward facing companies. You have the billionaire Elon Musk trying to make electric cars the norm, and then Richard Branson is working on making trips to space a reality for the average joe (that has 200k to fork over — but at least it’s a possibility!).
But, on a technical level, they have the exact criteria for a short squeeze.
High short float, near or at all-time highs, and a LOT of speculation. One of the reasons why they’re blasting off into space is because of all of the speculation, which inevitably, causes price to rise, and short sellers to cover.
SPCE experienced another gap up today, which we’re trading in my Mastery program and Short Interest Secrets class, as well.
Now, today, SPCE had some crazy moves. In the end it pulled back some and closed up on the day 5.56%. Still up, but a far cry from the 30% it was previously up.
But, for us, the fact of the matter is we’ve been in the key move for a couple weeks. The most important part about the short squeeze is to be positioned prior to the squeeze. This is one of my favorite setups, and one that I can say I truly never used to trade.
The Evolution of a Trader
In the beginning, when I first started trading, I didn’t understand much about trends, and certainly not Fibonacci… much less high short interest.
But everyone has to start somewhere. Tonight, I’m going to be going back in time to tell the story of where it all began — along with some tidbits about our live Austin events, at the webinar at 7pm CT. I don’t normally get so personal, but the story simply can’t be told without the details.
Traders like anyone, in any profession, evolve over time. With trading the mesh of new strategies, additions of mentors, and experiences along the way pave our paths. I hope you can gain something from learning about mine.