Transcription
Elon Musk made a big bet on Tesla, and it's creating a huge opportunity for investors. If you think politics and business aren't mixed, you're absolutely crazy. Elon Musk did the unthinkable, which is going to pay off big for Tesla. What's even more crazy is how much money we're going to make on Tesla.
To set us up, I want you to quickly watch this clip of Dan IES and what he had to say.
"Does that change that number? Look, I mean, I think this is a strategic bet that Musk made that ultimately could pay dividends for Tesla in a huge way for the coming years. I think $40 to $50 per share—this is just for beginners. Not just because of what could happen from a tax credit perspective. I think leveling the playing field, you take out the Detroit automakers, and then that's really going to give them an advantage from a cost scale and scope perspective.
Biden—the big thing here, Trump could ultimately FastTrack autonomous FSD. Our whole view, as we've talked about in the show, is trillion-dollar hours evaluation just on AI alone. This is going to unlock it. That's a key. Makes a lot of sense. Is there no scenario in which relations with China take a big hit and Musk is asked to pick a side?
In a sense, yeah. I think that on the other side, especially, it’s not just for Tesla; also Apple as well. For Musk, I think there's a comfort in him being in this situation where he could almost be a pseudo sort of, you know, ambassador, call it 10% politician, 90% CEO in terms of making sure that the retaliatory or the carve-out—they'll be important. The carve-out piece from a tariff perspective.
One of the reasons that you see Nvidia up today, you see semis; you look at Apple despite some fears about what we're going to see on tariffs. There's a view: maybe with Musk, the bar could be a little worse than the bite when it comes to tariffs, specifically on AI. I think that's really right now what's key—not just to AB but to the broader tax.
You started off by saying you think this could materially help Tesla having him in the White House. What sort of regulations are we watching?
So, I think there are three things. One is that the EV tax credits get taken away, and I think that even though that’s negative for the EV sector, it’s bullish for Tesla because of their scale and scope. From a price perspective for Detroit, though, potentially bad for Detroit, bad for, of course, bad for GM, bad for Ford as well, which in my view going into this was a potential risk. But I think Mary and the team have kind of pulled back a little, so it's not like they've bet it all on EVs.
So, I think one is going to be that where they get an advantage. Two, and I think probably most important is this autonomous FSD state because when you think about a cyber cab and everything we've talked about—could that be 2025 now, as Trump clears the path? This changes the whole paradigm I think for the regulatory authorities that oversee full self-driving; it's federal in nature.
All right, guys, so look, we're going to be looking at my notes, and I'm going to be opening up my portfolio, and we're going to take a look at Tesla stock. Because as you can see, I'm up $79,000 on Tesla, and I am not playing options at the moment, but I am thinking to start opening up a few different positions.
So listen up. The first thing that I want to say is, Elon Musk has a strategic bet on Donald Trump, right? He was a big Trump supporter. This is very, very interesting, and now that Trump has won the election, this is going to be a really bullish setup for Tesla. I think Tesla is going to be a $500 stock in the not-so-distant future.
Okay, let me explain what's going to happen and how I'm basically going to capitalize on this. Look, the first thing is Trump will help Tesla because EV tax credits will be taken away. Now from one perspective, you're like, "EV tax credits will be taken away? That's bad for Tesla, isn't it?"
No, it's actually not bad for Tesla. So I was doing a lot of research, and I'll tell you why. Tesla is more vertically integrated than many other auto manufacturers, producing its own batteries, producing its own software, and producing its own components. This integration reduces cost, improves margins, and allows Tesla to weather the impact of losing tax credits better than competitors.
Guys, this is a relative game. People have to buy cars; they're going to be buying cars. So when a company like Tesla is vertically integrated and they basically make everything within themselves and they're not reliant on other suppliers, that is a really big deal. Because what's going to happen is when tax credits get taken away, other manufacturers are going to suffer a lot more; their margins will be a lot lower or negative potentially, meaning they can't hire good talent. And if they can't hire good talent, Tesla is going to win. Tesla's already won, right? But they're going to win harder in relation to competitors.
As that happens, the brand's going to increase, the quality is going to increase, and, most importantly, economies of scale. Let me talk a little bit about economies of scale because during my college education, I was in finance, analytics, and economics. The thing is, with economies of scale, what that means is when you produce one good, right, just one time, it's really, really expensive.
Because, well, let’s say that you're producing a car. You have to buy the whole manufacturing plant and all these employees, right? If you sell one car, that one car would cost you like a billion dollars. But if you sell a billion cars, then the cost goes down because your fixed costs—like you know, the employees, the lights, etc.—get covered by a huge amount of volume.
Okay, the more volume a company does, the better, because they have better unit economics. Unit economics means that it's cheaper to produce each vehicle. So if Tesla were to produce, let's say, a million vehicles, it might cost them $50,000 per vehicle. But now, if they produce 10 times more vehicles—10 million vehicles—maybe, instead of $50,000, now it'll only cost $30,000 per vehicle. So their profit margin actually increases, not decreases; it actually increases from having more volume.
Okay, so that's the biggest cost and scale advantage that Tesla is going to have. Under the Trump Administration, I think we're going to see a lot of advantages for Tesla. Another one is Trump supports U.S.-based manufacturing, which I highly agree with as an American. Why would you want China to have all of the money manufacturing and their economy booming? Why don't we have it in our own country where our own plants are designing, manufacturing, and we have our own suppliers within the United States? That way, the money stays within the United States.
So, I think that's going to be really interesting for Tesla as well, and I think a lot of people are going to start realizing that this is a very dire time for America, right? America is at a very critical point, and things are getting a lot worse. Now is the time to basically have America turn things around. We really need to turn things around, right?
So when it comes to Elon Musk, he understands that. So he made a huge bet, and I think this is going to be reflected in Tesla. I think Tesla is going to reflect the good times we're going to experience right now in the economy. Again, I'm not trying to predict the market, and I don't have a political side; I don't—I could care less. I'm just trying to put the most amount of money in your pocket, and I am also trying to scale my portfolio past $4 million.
So right now you can see that Tesla is at $297; we're almost at $300 per share, and my average cost is $218. I've been making money hand over fist with Tesla—like literally hand over fist, bicep over tricep on Tesla—because I saw the writing on the wall.
Okay, when I looked at Tesla's chart, when I looked at their business, I was really bullish for the election. I already had a feeling, right? Who's going to win, based on social media and looking at Tesla? I think that Tesla is going to continue to rise, and that's actually why I don't currently have any covered calls on Tesla.
You guys know on this channel I'm a big proponent of running the wheel strategy, right? Selling puts and covered calls. I've been talking about the wheel strategy for basically 4 and a half years now. All right, I think that Tesla is actually not a good wheel strategy right now because the momentum is so hot. You should be jumping in with some leap options, with some buy and call options, or just holding stock, which is what I've been doing.
Now look, before I give you this play, one more thing about Elon Musk: Elon Musk is 90% CEO, as we saw that Dan I said, and he's basically 10% politician. All right? Elon is a genius, and Dan IES basically said that the stock was going to be $300 short-term. Well, hello, we're already at $300 in the short term, so the next stop is basically going to be $500 per share for Tesla.
In my opinion, $500 is actually going to happen a lot sooner than you even think. The last thing is the AI. All right? I think that AI is going to play a huge component for Tesla, and Tesla is going to dominate because the AI story right now—we've seen it with Nvidia, we've seen it with a lot of other stocks in the market. AI is going to be a big contributor to Tesla.
So let's jump into my portfolio. Let me tell you what I'm going to do with Tesla right now. I have 1,000 shares in this portfolio, and these are two plays that I gave out to my Discord Community, but they're basically going to expire worthless, right? I sold 200 puts and 220 puts. Tesla is nowhere near this; Tesla is around 300.
So what I think would be a smart move right now is a couple of different strategies. Okay, the first one would be to sell puts. Look, you want to sell puts on Tesla to get in; however, it's not necessarily cheap. So what I would do is I would go out to an expiration like December 20th, and then I'm going to try to get Tesla at around 260.
All right, so the Delta here is 0.2. Let me explain how this is really unique. All right? Typically, my sweet spot Delta is 30, but for Tesla right now, I would go for around 20. You can see that the volume here is 5,000 contracts that have been traded, and the open interest is 10,000. So the trading volume is really, really huge on the strike price right now; 260 I think is a no-brainer, right?
Because if Tesla's at 300, if it pulls back 10%, we're still going to be at 270 per share—this is for the 260 strike price. So literally nothing happens. If Tesla goes down, you're fine; if Tesla goes up, you're fine; if Tesla goes sideways, you're fine.
That's actually why, all right? I don't want to open up Pandora's box right now, but I'm actually selling puts on Tesla in my other portfolio on margin. So straight up, I have more Tesla than I can afford to buy in my other portfolio at 260.
All right, now how you should play this is if you have cash, don't go as extreme as me. I'm a professional; I've been doing this for a long time—a decade. All right? Take it easy if you're a beginner or you're intermediate, or even if you have a big portfolio and have some experience, regardless, I would recommend right now that you take a close look at the 260 and sell puts to basically get into the company.
All right? What you want to do is you want to acquire shares of Tesla, if possible, at a cheaper price. However, if you also want aggressive income and you're not super bullish on Tesla, what you can also do is you can purchase Tesla stock; you can buy 100 shares, and then you can sell a covered call option at the $300 strike.
As Tesla opens up here in the next—you know, I'm making this video in the morning, so if Tesla opens up higher, let's say it's above 300, I would go for the most aggressive close-to-the-money covered call.
Now, when I say aggressive, that doesn't mean that it's risky. I'm saying aggressive in terms of income generation. So I'm looking at selling a covered call option at Tesla to begin the position. Now, me personally, it doesn't make sense because I have owned Tesla for such a long time. I've been recommending it in my Discord Community for a couple of months now, so I'm just going to keep riding my shares higher.
So you have three choices: you can sell puts to get in at 260, you can buy some shares of stock and ride it, or you can do aggressive covered calls for aggressive income. I really call it safe income because a covered call is going to have less volatility and margin of safety versus buying the stock.
So I would recommend that you be either on the sell puts side, where you're acquiring the stock, or the covered call side, where you're getting aggressive income versus the middle point, which is just buying stock.
Now, one more thing I want to mention is I would be buying leap options. Absolutely, I would be buying leap options right now, and I've shown leap options many times on this channel, but I'll show you one more time. So I'm going to go to September 19, 2025. You can go buy call options now. The whole point of a leap option is you want to buy something in the money to get that upside exposure.
Now, Tesla options are expensive; they're not cheap, so they're expensive. But this strategy still saves you a lot of money. So versus buying 100 shares at, you know, 297, which is going to be 30 grand, you can still buy a call option for $8,600.
So it's still an expensive strategy, but you know the strategy is a little bit better than just having shares. So I would buy, let's say, for example, you can—well, that would be a lot, so let me go for five contracts. I would buy something like five contracts and just ride Tesla higher.
Now, if you want to lower your cost per contract here, you can also sell covered calls against it or even run a bull call spread. Okay, let me show you what a bull call spread would look like, or actually let me show you the poor man's covered call first. So let's go to January 17, and if I were to sell a call option, since I think we're headed to $500 per share in the somewhat near future, I can't predict when, right? I'm not a genie, guys. I'm not going to pretend to know what the market's going to do, but I am bullish.
So I’m going to sell the 350, for example, and here you will see that I am reducing my cost by $1,100, so this 350 covered call on the leap would basically be $11. That would subsidize my cost against the $8,600. So my new cost would basically be $7,500, which would be pretty advantageous.
Now, another strategy that you can use is you can sell a call option for the same expiration. So I can go for September 19 as well, and you know, I don't know if Tesla will reach 500 by, you know, the next nine months or the next one year. So it might reach $400, so you can just sell something like the 400, and you can instantly basically get $3,000 off.
So now your total cost would be $5,500. As you can see, your total max profit here would be pretty sizable, to be honest. You can make a really large amount of money here by essentially buying a bull call spread.
You can also run the wheel strategy on Tesla. I have recently just made a course on the wheel strategy; it is the best course that you can possibly watch. I have two different testimonials in that video. I know it’s a long video, but I highly encourage you, if you want to get good at option trading, you must check out this video right here. Sit down, take some notes, and do your best to at least go through half because I guarantee you it will change the way you look at the wheel strategy, and it will let you acquire stocks for a cheaper price.