Tesla Trading Idea with ETP; Break to $1,111.50

TESLA looks bullish with a potential break to $1,111,50; TSLA ETP to enhance profits

Dear traders, the article below will present my insights on TESLA (NASDAQ: TSLA) and Volkswagen (OTCMKTS: VWAGY) stocks. I will also explain how you can benefit from trading the ETPs.

Tesla Stock Trading Idea Explained

Many traders have been asking me different questions time and time again. Is Tesla a good stock to buy, how to short TSLA stock, what is TSLA? Tesla, Inc. is an American electric vehicle and clean energy company based in Palo Alto, California. It is listed on NASDAQ under the TSLA symbol. You can also trade TSLA with a factor of 2x or 3x leverage with a listed Tesla ETP instrument.

All other questions can be answered, but before we delve deeper, we need to explain some important things regarding the evaluation of TSLA stock and the forward P/E Ratio.

Price to Earnings Ratio

Price / Earnings ratio (P/E Ratio) is also like saying, how many years of Earnings does it take to pay back the price. A company with a Price/Earnings ratio of 14 says it might take 14 Years of Earnings to repay the price. So, in short, Earnings is the amount a Company Earns for the Year. On March 31, Tesla’s PE Ratio was 1,066.98.

The normal P/E Ratio should be somewhere between 10-25, which means using today’s earnings and valuation, it would take 1066 years of Earnings to pay back the current investment. It means, therefore, the price of the stock is mainly based on Future Earnings.

The conclusion is that investors expect the Future Earnings to rise substantially on TSLA stock.

Tesla belongs to the industry where there will be competition, but the investors think it’s the lead company in this space. Still, in my opinion, it is pretty much wrong to feel this way because there are car manufacturers with over 100 years of trading experience that will also play in the Electric Vehicles space and be competitive against Tesla.

Given the current political mandate on climate change, electric vehicles would be the only ones being sold in the post year 2030, so it has a large market to play in. While Norway is already banning new internal combustion vehicles from 2025, Sweden, Denmark, the U.K., Ireland, and the Netherlands, for example, are planning this step for 2030.

I wouldn’t be surprised if Germany and France follow suit in the next few years.

Significant factors in the electric vehicle industry will be:

1. Charging stations
2. The demand for batteries available for the new electric vehicles

The electric car bandwagon is gathering speed. Volkswagen now says 70% of sedan and SUV sales from its namesake VW brand in Europe will be battery-electric by 2030. Investment bank UBS raises its global electric predictions to unprecedented heights. Still, mainstream forecasters don’t share this exuberance.

People think that Tesla will have a monopoly on Electric Vehicles, but in my opinion, they are wrong as major car manufacturers are planning the same thing.

Volkswagen Stock Analysis

Short Term Stock Analysis

Volkswagen (VOWG.DE) is having a strong uptrend. Shares of Volkswagen, a German car giant, have been in an uptrend ever since a Wall Street analyst raised his bank’s price target for the stock on a bullish view of the company’s electric car plans. Obviously, the EV plans for the German giant boosted the price of stocks. 271-281 is the buying zone, and we can see a lot of confluence.

If the market bounces from the zone, we should expect a re-test of M H3 356.25. Loos for a breakout of the A-B-C pattern and the move to 400.87. VOWG.DE stock, in my opinion, has a good swing potential on the H4 timeframe.

Tesla Stock Analysis

Short term stock analysis H3

In the chart above, we can see a strong uptrend. The strong uptrend goes in accordance with supporting fundamentals where investors are very bullish. TSLA stock is a “risky” stock meaning that Tesla does have investments in bitcoin. They might be using bitcoin to deal in sales, so that might be inflating their value.

The value is definitely overpriced, and if you invest in Tesla, it’s similar to investing in Bitcoin. It is a herd mentality, and traders think it will take over the giants IBM and Apple. Due to that factor, the short-term TSLA trading idea is bullish.

We can see a strong buying zone around 616.50. See the zoomed chart below.

We can easily see rising trend lines and an A-B-C bullish pattern exactly at support. Targets are 764, followed by 820 and 887. Short-term rising ABC pattern, camarilla pivot points are supportive for bulls, and buying the dips is a good scenario. At this point, we see that price wants to retest the high of 889 but judging the current momentum and the price action, we could easily see a breakout towards 1111.50. This is the strongest camarilla resistance level Q 5 camarilla. When the price hits the level, short sellers will have the opportunity to sell the stock

Trading Tesla ETPs

In the case of ETP trades on TSLA stock, we can magnify the exposure even without the need for a margin or CFD account.

As you trade it like any other stock, the entry zone 616.50 (308.00 zone in TSL2) is the zone where you might get into a magnified exposure. The advantage of trading TSLA stock with the magnified exposure allows a trader to multiply the returns of any asset, in this case, TSLA.

Let’s see the example of the above trading idea where the 616.50 zone is a buying zone. For example, let’s assume you open a trade, the ETP that trades TESLA stock, and you go with a leverage factor of 2 (TSLA2). When the Tesla share increases by 2% during a trading day, your ETP (TSLA2) will increase by 4% (excluding fees and adjustments).

Conversely, if the value of Tesla drops by 2% on any given day, ETPs offering 2x exposure will lose 4%, respectively.

Swing TSLA Trading Idea

Now, moving back to a daily chart, the situation is similar, but there is a twist. The daily, being a swing trading time frame is susceptible to fewer fluctuations than H4 or H1, we can spot a clear breakout in the trend direction. As stated above, our fundamental analysis highlights the herd mentality, and investors follow the bitcoin pattern. Buying the dips as speculation takes place that TESLA will be the global leader in electric vehicles. Let me ask you a simple thing.

At the end of the day, would you rather have a Tesla EV in your garage or a Porsche EV?

I’d have the Porsche, and the VW Group company is worth only a mere fraction compared to Tesla. VW Group is USD1355Bln market cap, PE ratio of 17.61

Tesla is USD682Bln, PE Ratio of 1112.00; that’s just crazy. The price is over-inflated, and sooner or later, this is going to burst like a bubble. Watch it.

*(Source: Investopedia)

What is an ETP

Now, let’s talk about ETPs and how they could improve your potential gains while reducing trading risks with TSLA. The ETP stands for leveraged exchange-traded products. The standard definition of the ETP* is that Exchange-traded products (ETPs) are types of securities that track underlying securities, an index, or other financial instruments.

ETPs trade on exchanges similar to stocks meaning their prices can fluctuate from day-to-day and intraday. However, the prices of ETPs are derived from the underlying investments that they track.

Main Benefits of the ETPs

There are multiple benefits of trading the ETP compared to standard stock trading. You can choose leveraged (3x, 2x) and Inverse (-1x) exposure to stocks and blue-chip companies such as Tesla, Apple, Amazon. You don’t need a margin account (no margin calls). Additionally, you can trade ETPs just like any other stock/ETF on a regulated exchange (unlike CFDs) via most major brokers.

ETPs are listed on the London Stock Exchange and Euronext in EUR, GBP, and USD, and all of the ETPs are physically backed with the underlying shares, so there is no credit risk.