5 Unfilled Gaps In Tesla (TSLA)’s Chart

Tesla stock has recently lost nearly 50% of its value in just over two months. Now it's within striking distance of a large downside gap that could act as a tactical target for a bearish bet. But be warned: Many Tesla bears have fallen victim to this EV stock, and shorting Tesla is not for the faint of heart. For those brave enough to consider it, read on.

Justin Nugent

This article was last updated on 11/25/2022.

Gap Fills: What You Need to Know

  • gap in the chart is when a security moves sharply up or down with very little trading in between. 
  • Gaps can be created by an earnings report reaction, a piece of news, or something in the macro. 
  • Gaps are easier to identify with candlestick charts than with line charts. A gap is simply any empty period between the top and bottom wick of two adjacent candles. 
  • A gap becomes “filled” when the price action returns to trade inside the empty area, touching both the bottom and top of the range.
  • Gaps in the chart fill 80% of the time. Because of this, gaps act as a magnet, drawing short-term traders to chase that area as a price target.
  • After filling, gaps typically reverse, at least temporarily. After the “target” gap has been filled, the same short-term traders who drove that momentum typically exit their positions, reversing that momentum.
  • For more information about gap fills, including a video explanation from a licensed CMT, check out this free article.

Ready to start trading the technicals? Try Rebel Weekly. Ride the waves of market momentum with two actionable trade ideas designed to capture technical break outs and break downs — delivered to your inbox every week.

Unfilled Gaps in Tesla Stock

On September 21st, Tesla traded as high as $313.80. Suddenly, Market Rebellion began identifying a slew of bearish unusual option activity in far, far out of the money Tesla puts. By November 22nd — just two months later, shares of TSLA traded as low as $166.19, and the smart money’s bearish premonition had proven to be accurate. 

Tesla underperformance relative to SPY since late September.

As the pace of Tesla’s race to the downside continues to accelerate, the stock is nearing a very large gap

Let us show you how to find Unusual Options Activity

Everything you’ve ever wanted to know about Unusual Options Activity—in one convenient insider’s guide.

Source: TradingView

As stated above, gap fills can be somewhat of a self-fulfilling prophecy — as a stock nears the level, short-term traders join in to try brace for one of those “8 out of 10” probability moments. 

In this case, TSLA has four large gaps all the way down to $43.47 — and one ($144.34 – $137.48) that is now within striking distance (roughly 15% away at the time of writing). At the same time, there is one unfilled gap above ($257.50 – $262.47), which is more than 50% away from Tesla’s current share price.

There’s nothing that says any of these gaps must fill — and considering that some of these have existed since mid-2020, this isn’t necessarily a “timely thing” either. However, these unfilled gaps can act as powerful magnets — trading targets that one can utilize when momentum is pushing in the right direction. 

Ready to start trading? Try Unusual Option Activity Essential. Learn how you can follow the “smart money” with a fresh UOA trade idea each week – including technical levels so that you know where to enter and exit!

Deep End of the Pool: Chasing Downside in Tesla

With Tesla stock having recently lost nearly half of its overall value, the nearest gap lower looks to be a possible tactical trading target. One could use options, for instance a $150 strike January 2023 long put (which currently costs roughly $7.00, with a breakeven of $143). 

Alternatively, you could deploy a long put debit spread at the same date by selling the $135 put against the $150 (which would currently cost roughly $3.00 and provide a maximum value of $15.00), in order to take a defined-risk shot at further downside in Tesla. 

Level Up Your Trading

Get a custom-designed trading program tailored to your individual needs, skill level, and schedule.

While outright shorting stock is an infinite risk maneuver which does not provide leverage, options are effective tools for making bearish bets because they provide a high amount of leverage, and allow you to define the total amount you can lose.

However, despite the fact that options provide you the ability to cap your maximum risk, you must still always trade with caution and discipline. That’s the number one thing we preach at Market Rebellion.

Unusual Options Activity

Want more free market intel? Check out Market Rebellion’s Rebel Hub for the biggest stories on market-moving events, how-to trading guides, and the latest in Unusual Option Activity from Jon and Pete Najarian.

Unlock UOA Trading Secrets

Watch our free 7-minute tutorial on how pro traders harness unusual option activity.

By clicking Get Access, you agree to receive marketing offers from Market Rebellion, and its affiliates, subsidiaries, or agents in the form of emails, pre-recorded messages, text messages, and autodialed calls at the email address and phone number provided above, even if the phone number is present on a state or national Do Not Call list. You recognize that you are not required to provide this consent as a condition of purchase and that you can withdraw consent at any time. Data rates may apply. By clicking below, you also agree to our  Terms of Use  and acknowledge our  Privacy Policy.

Black Friday Deal—Save 15% OFF Any Trading Service!

Use Code blackfriday2022 at checkout.