Tesla (TSLA): Is the Post-Event Drop a Buying Opportunity?
Tesla’s much-anticipated Robotaxi event has come and gone, leaving some investors underwhelmed. It was supposed to be the big moment for the company’s autonomous driving plans, but the market response wasn’t what many expected. Following the event, Tesla (TSLA) shares dropped nearly 10%, signaling investor impatience. However, while this reaction seems negative on the surface, it’s creating a potential buying opportunity for those willing to look past the short-term noise.
At the event, Elon Musk revealed the highly anticipated Cybercab and a prototype of the CyberVan, while Optimus robots showcased new capabilities, such as pouring drinks. Production for the Cybercab is expected to start in 2026, with availability slated for 2027. Additionally, Tesla plans to introduce full self-driving (FSD) in California and Texas by Q1 2025, pending regulatory approval.
The details were impressive, but the market wanted more clarity on the immediate future of Tesla’s Robotaxi business. This initial disappointment could be creating a discount on Tesla’s stock. Musk’s vision and drive for autonomous driving remain a significant upside, and this pullback could be a moment to capitalize on the stock’s recent sharp movements.
Trade Idea: Capitalizing on Tesla’s Short-Term Volatility
Tesla’s stock is emotional, driven by both love and hate for Elon Musk, thanks in part to Musk’s frequent presence in the news cycle. As with any stock driven by emotion, this can create opportunities for savvy investors. One strategy to take advantage of the current situation is a Risk Reversal options strategy.
Here’s the play: by selling a put option at the $215 strike for November 15th, 2024, and using that premium to buy a call option at the $245 strike, you create a credit spread. This results in collecting a short-term premium of $7.25 (or $725 per one spread). When the trade was executed, Tesla was trading around $216, so this strategy makes sense as long as Tesla stays above $208.
If you’re comfortable owning Tesla stock even if it continues to face downward pressure, this strategy gives you the upside potential if Tesla recovers. It’s a play that could benefit from the stock’s volatility in the near term, while keeping the long-term growth story intact.
Why the Negative Reaction?
Analysts and investors alike were hoping for more concrete details on Tesla’s Robotaxi timeline. But if we look at the bigger picture, it’s clear that Tesla’s plans for autonomous driving remain robust. The unveiling of the Cybercab and CyberVan, coupled with the evolving AI capabilities of Optimus robots, are just the latest innovations from Musk’s ambitious roadmap.
While the market might be disappointed now, these developments should keep Tesla well-positioned for future growth. Sometimes, patience is key in investing, and this dip could be the chance for investors to get in before Tesla’s next big move.
