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Tesla released its earnings report yesterday. The stock fell about 13.55%. We are officially, for the first time in a very, very long time, entering our long-term monthly discount zone. In 70% of cases, this is a good time to buy shares. We will talk about the real results of thousands of different transactions when the price is within this discount range.
We will discuss how long I think it will take for the price to return to $500 and the worst-case scenario for Tesla over the next 3-4 months. Because after long months of waiting, these stocks are back on my radar , and finally at a level where, in my opinion, they're worth paying attention to. First of all, I want you to understand and remember: we usually aim to trade within or find bullish cycles .
One of the best ways to do this is to wait for the price to redistribute downwards to the monthly fair value range. So, if we turn on our monthly fair value range, you will see that this support level is usually one of the strongest in the market for identifying not a short-term bottom , but a long-term bottom.
True? The last time the price fell to this level was in March 2025. Then it rose by about 75 % in 200 days, but it took about 60 days to reach the bottom. We are now rolling back into this discount range. We are trading right near the middle band, and that is again very, very strong support. So let's take a look at the real data on what happens when we trade in these zones.
When the price reaches the upper limit, i.e. the shallowest part of the monthly fair value range, the price rebounds 70-72% of the time. This means that if you buy long-term within this support level, you have a very high chance that the price will be significantly higher over the next 12-18 months.
Your average profit is about 24%, your average loss is about 22%, which gives a profitability ratio of about 2.6. So, a very high percentage of successful trades and a quite decent risk-reward ratio. Expecting the price to reach the midpoint at around $39 would give us a success rate of 58% to 59%. With a profit of 33 to 43 and a loss of 17 to 19.
So now your winning percentage is going down because the price is rolling back further. And in addition, your risk-reward ratio increases. Again, this will provide you with the same rate of return. So whether you buy at the upper limit or the lower limit will change your winning percentage. This will change your average profit and loss, but will not change your overall rate of return in the long run.
Waiting for the biggest discount, i.e. waiting for Tesla to drop to 280, which I think is the worst case scenario, gives you a 50% chance of winning. So, essentially, it's a coin toss with an average profit of 37-49% and an average loss of 14-15%. Again , this gives you a return ratio of 2.6. So when the price rolls back into this discount zone, we know that there is a very high probability of a rebound.
If you wait for a better price , say at a deeper support level, you will get the same result in the long run. Not today, right? But if you were to use this system for thousands of trades, we are now about 4% below the median. Another thing I want you to consider is what usually happens when you open this position.
When we see the price roll back to the fair value zone, in 50% of cases it immediately bounces back. I don't think this is one of those cases, do you? I don't think it will be the same this time, because we just got off the earnings report. We have a fundamental reason for the decline in stocks. It's very rare that we just bounce back and recover very quickly.
I would really like that, but I don't think it will necessarily happen. In the other 50% of cases, the price usually continues to fall further into the zone. This means that entering the zone gives 60-70% of successful trades, but in the short term your position will be unprofitable. You very rarely buy and immediately see a full recovery.
So, looking at Tesla, I expect that if you buy today, the price will probably continue to fall, to $280 in the worst case. You might be in the red for the next 30–60 days. But I believe the price will find a bottom in the $280 to $ 290 range. Given the statistics of similar setups, over the next 6–12 months the price will return to around $500.
So, do I like Tesla now? Yes. I think the risk-reward ratio is pretty good right now . Here you have the potential for about 50% upward movement. By the time this monthly BX turns red, you will have about 25% of the move down. This is a 2:1 risk to reward ratio, even with a 50% success rate, and we have proven to have a much higher rate.
You will get a very good result. Now, which trading method is the most optimal? And quickly , before we start, I want to say that you can access the Fair Value Band indicator to find these discount zones by taking the THT Bull Cycle Trading course via the link in the description. Both the indicator and the course are completely free.
Now, knowing what we know: there is a very high probability of a rebound , but there is also a high probability that the price will continue to decline. The best way, in my opinion, to do this in the long term is to sell cash-backed put options. When you sell a cash-backed put, you are effectively being paid to freeze capital to place a limit order at a specific price.
So, for me, if I sell such an option at $300, it means that if the price reaches $300, I will be forced to buy the stock at that price. Well, that sounds pretty good, because $300 is a very good price. And we have a very high chance of a rebound, maybe not in the short term, but in the long term. In the worst case scenario, the price will bounce back instantly and you will at least get some payout during that time.
Overall, if you have patience and look at the next 6–12 months, you will get a great result here. This is a good level for buying at a discount. I really like the way it looks. Do I want the price to reach 300? Yes, but I'll probably start forming a position sooner.
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