My Biggest Trading Loss in 2 Years

Dear Traders,

Today, I had my biggest day trading loss in the last two years: over $75,000 on Tesla. I had a bias toward short, and I kept trying to short it, although the price action was really not confirming it.

Having a bias about a trade is dangerous. Today, Tesla reported its delivery numbers, and it was by far its biggest delivery miss. Since the pandemic, it is the first year-over-year drop in its delivery of cars, which results in Tesla not being a growth company anymore. It is now in a mature stage.

I have always been concerned about Tesla. With a forward P/E ratio of 40, Tesla is way higher than “normal” car manufacturers such as Ford or GM (which are around 9-10) and it is about double what most SPY500 companies are (around 24).

Given this, I have been saying for months that Tesla’s price doesn’t make sense, unless Elon Musk can really pull a rabbit out of the hat and introduce a new revenue model for this company.

But, having this short bias is not helpful in trading, and especially in day trading. As you will see in my recap today, my bias led me to make the trade to the short side, many times, and each trade required me to get out with a big loss. A lesson can certainly be learned from today’s recap, which you can watch here.

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In this webinar, Jarad will talk about how Implied Volatility and Skew can affect the probabilities of your trade. He’ll provide you with a full overview of Options Volatility, from start to finish. He will cover IV Concepts, Call/Put IV Skew, and the Market Dynamics surrounding them. Additionally, he will cover how specific strategies carry unique probabilities of profit potential when you have volatility on your side.

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I am excited to see everyone at the BBT Summit this weekend!

To your success,
Andrew