On June 6, 2025, Tesla Inc. (TSLA) experienced heightened volatility following a public feud between CEO Elon Musk and President Donald Trump. The discord centered around Musk’s criticism of Trump’s “One Big Beautiful Bill,” which proposed cuts to electric vehicle subsidies—a move potentially detrimental to Tesla’s interests. In retaliation, Trump threatened to revoke federal contracts with Musk’s companies, leading to a sharp decline in Tesla’s stock price. The stock plummeted by over 14% on June 6, erasing approximately $150 billion in market capitalization, before rebounding by about 6% the following day as investors speculated on a possible de-escalation of tensions. (markets.businessinsider.com, ainvest.com, euronews.com)
Amidst this backdrop, a trader engaged in 0DTE (zero days to expiration) TSLA call vertical spreads, specifically the 320/322.5 strike prices. The initial position was a bear call spread entered for a credit of $0.05, accompanied by a stop-limit buy order to close at $0.15, which was later triggered. A subsequent attempt to re-enter the same spread at a higher credit of $0.10 was made, with a stop-limit order to close at $0.30; however, this order expired, indicating the trade moved favorably.
In the screenshot above, we see a trader who executed vertical call spreads on TSLA (Tesla) for the June 6, 2025 expiration. Let’s walk through what happened and the key lessons learned.
📊 Trade Summary:
📘 TSLA 320/322.5 Call Vertical Spread Trades
| Time (ET) | Action | Spread Type | Strike Prices | Direction | Entry Type | Price | Status | Quantity |
|---|---|---|---|---|---|---|---|---|
| 10:42:52 AM | Sell | Vertical | 320/322.5 CALL | Bear Call Spread | Limit Order | 0.05 | Filled | -1 |
| 10:42:52 AM | Buy | Vertical | 320/322.5 CALL | Close Position | Stop Limit | 0.15 | Filled | +1 |
| 11:09:57 AM | Sell | Vertical | 320/322.5 CALL | Bear Call Spread | Limit Order | 0.10 | Filled | -1 |
| 11:09:57 AM | Buy | Vertical | 320/322.5 CALL | Close Position | Stop Limit | 0.29 (stop), 0.30 (limit) | Expired | +1 |
🔍 What Happened?
- Initial Trade at 10:42 AM:
- Entered a bear call spread (sold the 320 call, bought the 322.5 call) for a credit of $0.05.
- Set up a stop-limit buy order to close it at $0.15, which was filled later.
- Second Attempt at 11:09 AM:
- Tried to re-enter the same bear call spread at a higher credit of $0.10.
- Also placed another stop-limit order to close at $0.30, but it expired, indicating the trade moved in their favor.
📌 Notes:
- 0DTE: All options expired the same day (June 6, 2025).
- The first spread was closed quickly with a loss (0.05 credit, 0.15 debit = $10 loss per spread).
- The second spread was placed for a higher premium (0.10 credit) but was not closed, meaning it likely expired worthless and profitable.
- This happened during TSLA volatility related to political news involving Elon Musk and Donald Trump.
📚 Key Lessons Learned:
1. Understand the Impact of Political Events on Market Volatility
The Musk-Trump feud exemplifies how political developments can significantly influence stock prices, especially for companies like Tesla that are intertwined with government policies. Traders must stay informed about such events, as they can lead to rapid market movements and affect the profitability of options strategies.
✅ Lesson: Political headlines can drastically move stocks—especially names like Tesla.
2. Exercise Caution with 0DTE Trades
Zero days to expiration options are highly sensitive to price movements and time decay. While they offer potential for quick profits, they also carry substantial risk, particularly in volatile markets. Traders should ensure they have a solid understanding of the underlying asset’s behavior and current market conditions before engaging in 0DTE strategies.
✅ Lesson: Always use risk controls like stop-loss or stop-limit orders—but understand how they work.
3. Implement and Adhere to Risk Management Strategies
The use of stop-limit orders in the trades highlights the importance of predefined exit strategies to manage losses. However, it’s crucial to recognize that in fast-moving markets, stop-limit orders may not always execute as intended. Traders might consider using stop-market orders to ensure execution, albeit with potential slippage.
✅ Lesson: Always use risk controls like stop-loss or stop-limit orders—but understand how they work.
4. Avoid Overtrading After a Loss
The decision to re-enter a similar position after the initial trade resulted in a loss underscores the temptation to recover losses quickly. This approach can lead to overtrading and increased exposure to risk. It’s essential to evaluate the validity of the setup and ensure that re-entry is based on sound analysis rather than emotional responses.
✅ Lesson: Don’t revenge trade. Re-entries must be based on sound setups, not emotions.
5. Maintain Detailed Trade Records for Continuous Improvement
Documenting trades, including entry and exit points, rationale, and outcomes, facilitates post-trade analysis and learning. By reviewing past trades, traders can identify patterns, refine strategies, and enhance decision-making processes.
Here’s a concise and informative blog post based on the image you provided, which reflects a real trade involving TSLA call vertical spreads.
✅ Lesson: Keeping logs or screenshots lets you review, learn, and improve future trades.
6. Know When to Take Profit
The first spread was exited quickly for a $0.10 loss (sold at $0.05, bought to close at $0.15). The trader was likely trying to limit loss. This shows good discipline, even if the market later moved in their favor.
✅ Lesson: Set a plan before entry. Stick to your stop-loss and accept small losses to avoid bigger ones.
7. Don’t Chase the Market
The second trade was placed at a higher credit ($0.10) and the closing stop-limit order expired. This implies that the position never hit the stop—a sign that TSLA stayed below 320, and the spread worked as expected.
✅ Lesson: Sometimes your first trade gets shaken out. Don’t always feel the need to re-enter unless the setup is still valid.
8. Stop-Limit Orders Can Protect or Hurt
The stop-limit order in the first trade worked and limited loss. But in fast-moving markets, stop-limit orders can also fail to trigger, or worse, trigger too late if not well set.
⚠️ Lesson: Understand how stop-limit orders work, and use them carefully. Consider using a stop-market order if slippage is not a major concern.
9. Small Spreads = Small Margins
This was a $2.50 wide spread, with max gain and loss potential limited. When trading tight spreads:
- Commissions matter more.
- Bid-ask spreads hurt more.
- Profits can be capped quickly.
✅ Lesson: Always weigh risk vs reward. Tight spreads can be good for short-term trades or high-probability setups, but aren’t always worth the risk.
🧠 Final Thoughts
Trading options in a volatile environment, especially with 0DTE strategies, requires a disciplined approach, thorough market understanding, and robust risk management practices. Staying informed about political and economic developments, like the Musk-Trump feud, is crucial, as such events can have immediate and profound effects on market dynamics.(en.wikipedia.org)
For more information on the Musk-Trump conflict and its impact on Tesla’s stock, you can refer to the following articles: