Worst-performing Mag 7 stock creates potential opportunity with a bull call spread offering 1.65:1 reward-to-risk ratio on TSLA's potential recovery.

MARKET SNAPSHOT

📊 TSLA shares down 37.6% in 2025, worst among Mag 7 stocks

‼️ Technical support at $214.25, with resistance at $299.29

📈 Bull call spread offers 1:1.65 risk-reward with September expiration

MARKET BREAKDOWN

Macro Lens – Big Picture Market Forces

The tech sector continues to face headwinds in 2025, with all Magnificent 7 stocks experiencing corrections from their 2024 highs. While most have seen declines between 8-18%, Tesla stands out with a much steeper 37.6% drop as of April 14. This correction comes amid changing political landscapes and policy shifts under the Trump administration, creating both challenges and opportunities for strategic options traders.

Sector and Stock Watch – Identifying Key Movers

Tesla remains the world's leading automaker by market capitalization despite its significant price decline. The EV leader has been particularly impacted by political factors, including Elon Musk's support for President Trump and his appointment to head the Department of Government Efficiency (DOGE). Tesla's fate appears increasingly tied to the administration's success, making it a unique proxy play on political outcomes compared to other tech giants.

Trading Strategy in Focus – How to Play the Market

High volatility in TSLA stock (monthly historical volatility of 66.8%) has made options premiums expensive, with implied volatilities for September calls running between 60-65%. This environment creates ideal conditions for vertical spreads, which can capitalize on directional movements while limiting both cost and risk exposure. For traders with a bullish outlook who believe the worst-performing stock during a correction often leads the recovery, a bull call spread offers an optimal risk-defined strategy.

SMART TRADE IDEA

Bull Call Spread on TSLA

Trade Setup:

• Buy $250 Call

• Sell $300 Call

• September 19, 2025 expiration

Entry Price and Risk Reward:

• $18.90 ($1,890 per contract)

• Max Profit: $31.10 ($3,110 per contract)

• Breakeven: $268.90

• Risk-Reward Ratio: 1:1.65

Management Plan:

• Consider taking profits if the spread value reaches $25 (approximately 32% gain).

• Set a stop loss at 50% of initial investment.

• If TSLA breaks above $275 before August, evaluate rolling the position up to capture additional upside.

Open This Trade Instantly with Trade Link on Tradier Brokerage!

NOTE: Remember, options trading involves substantial risk and is not suitable for all investors. Consider your investment objectives, financial resources, and experience level before implementing this or any options strategy.

DISCLOSURE: Trade recommendations may have changed since publication. Evaluate current market prices and risk/reward before acting. Trading involves significant risk and is not suitable for everyone. This is not personalized investment advice. Past performance doesn't guarantee future results. Publisher and contributors may hold positions in recommended securities. Readers assume full responsibility for their trading decisions. Consult a financial professional before investing.

This idea comes from an article I wrote for Tradier and reflects my sole opinion about the future path of least resistance of TSLA shares, the Mag 7, and the potential for a recovery rally. The trade involves the risk of a significant loss and is only appropriate for market participants with a bullish view of TSLA shares. 

Critical technical support for TSLA shares is at the recent April 7 $214.25 low, which could be a significant bottom. If the shares fall below the April 7 bottom, stopping out of the long call spread will protect capital, or looking to establish it at a lower level, i.e., 230-280 with the same or better risk-reward dynamics would increase the odds of success if lower lows are on the horizon in the volatile environment before a recovery occurs.

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Tradier offers fast execution, direct API access, and seamless platform integrations—all with a flat-rate subscription model that eliminates per-contract commissions. Trade on your terms with a brokerage designed for serious traders.