On CNBC's "Options Action," Mike Khouw suggested an options trade in Tesla Inc (NASDAQ: TSLA). He said it's hard to value the stock, but he sees some important technical characteristics that can help him set up the trade.
Khouw sees Tesla's all-time high as a resistance level and there is also an unfilled gap between $650 and $685. He wants to take advantage of high implied volatility and buy the June $685 put and sell two June $650 puts for a total credit of $12.50.
The trade is going to make money if the stock stays above $602.50 at the June expiration. It would reach its maximal profit of $47.50 if the stock closes at $650 at the June expiration. If the stock closes below $650, Khouw is going to have to own the stock at that price.