On Monday, I sent you a video about my short-term setup in Tesla, along with my $250 price target. You can check it out in the Tweet below…
Danielle's Short-Term $TSLA Trade Setup Is Unfolding Beautifully!📈
🎯 Targeting $250
🦋 15-wide butterfly
🖥️ Trade idea was showcased in her video yesterday on the Simpler Trading Youtube
— Simpler Trading (@simplertrading) November 28, 2023
Since then, the squeezes I noted fired to the long side, and Tesla traded directly to my Fibonacci price target at the 1.272% extension level. Check out a screenshot below:
As you can see, since TSLA hit the Fibonacci extension level, it’s already come back down. This is why it’s important to take profits at targets! I know many of you made money on this idea, because I got the messages! Cha-ching!
When trading, especially with butterflies, the idea is to take profits as close as possible to the center strike, which is also the profit target zone. One common question I get with butterflies is, “Do you wait until the day of expiration to close your trade?” NO! I do not.
I take profits at the profit target zone whenever the ticker gets there. This could be a few days before expiration, or it could be a few weeks. In a perfect world, it gets there within 3-5 days of expiration, as that is when the best profit potential lies, as it’s when the butterfly matures. It won’t be as profitable if it gets there earlier than that, but you should still make money.