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Tesla Inc. (NASDAQ: TSLA) got an "early" holiday gift, and it's definitely something they're going to spread around - every investor should be a part of this.
If you're not already, now's the time to move.
There were some terrible quarters (though that's far in the past), and there were months of waiting. There were weeks of speculation. And then, the big moment...
Tesla has officially carved out a spot on the S&P 500. For a publicly traded company, that's the ultimate - the biggest of the big leagues.
This could be the most significant development for investors since the stock went public...
It's Been a Long Road for This Electric Car Maker
Tesla's new spot is fantastic news, especially when you consider that 18 months or so back, during so many unprofitable quarters, the S&P 500 might as well have been on the far side of the moon as far as Tesla was concerned.
To even be considered by the Index Committee for inclusion on the S&P 500, your company has to be worth $8.2 billion - no biggie for Tesla, as it hit that milestone a while ago.
The sticking point for Tesla was a profitability streak; the committee wants companies that have been profitable for at least five consecutive quarters, which happened last quarter for the first time in Tesla's 17-year history.
Since Tesla was eligible then, investors loaded up in anticipation.
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Then the committee took a pass. It looks at a wide range of quantitative and qualitative criteria.
A lot of people felt it was a snub, but whether it was or wasn't, investors breathed a high sigh of relief last week when the Index Committee agreed to Tesla's accession.
But it's what the big, institutional fund managers will do with Tesla that we've got to contend with. When they see Tesla is an S&P 500 component, they will buy... and buy... and buy big. Inclusion on the index is one of the criteria fund managers consider when they're thinking about how best to splash around their vast piles of cash.
TSLA is a tad on the expensive side at more than $520, but even these prices could be a distant memory by the end of December.
It goes almost without saying that you should buy here and add on the dips. One strategy you can use to lowball the market and get a better price is selling December puts.
You get the cash right away, and you're then obligated to buy the stock at the agreed upon, ideally lower strike price. Selling puts can be risky, but it's one way you can "name your price."
Tesla's now one of the biggest companies on the market - it's the biggest carmarker. But it's possible for regular investors to leverage smaller stocks - some of the most explosive shares on the market - where tiny moves can potentially trigger gains upward of 400% in a matter of days. You can learn more about how to do it...
About the Author
Andrew Keene is a globally known trader and a renowned expert on all things options.