As the broader markets shake off the early February rout, we are finally seeing the green shoots of a recovery. For mean reversion traders, this post-volatility environment is a goldmine. One setup catching my eye right now is Tesla . After shedding over 21% in the last 30 days, the stock is finally finding its footing. The selling pressure appears to be exhausting itself, setting the stage for a classic snap-back rally. What I’m watching This is a pure technical play, and I am tracking three specific indicators to confirm that the bottom is actually in: Directional Movement Index (DMI): My first look is always at the DMI to gauge the internal strength of the trend. We saw a critical shift around Feb. 5, where the DI+ (green) and DI- (red) lines began to pivot and change direction. This divergence is often the first tell that the dominant bearish trend is losing steam and a reversal is brewing. RSI (Relative Strength Index): While RSI is famous for spotting oversold conditions, it doesn’t always need to hit the floor to trigger a buy. In this case, Tesla’s RSI never quite touched the official oversold territory, but it got close enough to matter. More importantly, it is now bouncing sharply off those lows, signaling that momentum is rapidly shifting back to the bulls. MACD (5,13,5): Finally, I am looking for confirmation from my tuned moving average convergence divergence, or MACD, metric. Using the faster (5, 13, 5) settings allows me to see turns that standard settings often miss. Right now, we are watching a setup in real-time: the MACD line (blue) is curling up and is about to cross above the signal line (yellow). Once that crossover executes, the entry signal will be complete, giving us the green light to take the trade. If you are interested in following an emotionless trading system built on these principles, please check here , where my CNBC readers get a special 25% discount for 3 months. The trade setup: TSLA 420-425 bull call spread For this setup, I am executing a bull call spread. This strategy is ideal here because it offers significant upside leverage while keeping our capital exposure strictly defined. We can initiate this position for a limit price of $2.50 per contract (or $250 per spread). This low entry cost allows us to scale the position easily — for instance, risking $2,500 on a 10-lot to potentially make $2,500 in profit. That 100% return is fully realized if TSLA simply closes at or above $425 by expiration. My approach to strike selection is adaptive. I prefer to “bracket” the current price to maximize our probability of success. If TSLA weakens and slips below $420 today, I will shift my strikes down, targeting the 415/420 call spread instead to ensure the trade remains centered on the price action. Here is my exact trade setup: Buy $420 call, March 6 expiry Sell $425 call, March 6 expiry Contracts: 1 Cost: $250 Potential Profit: $250 -Nishant Pant Founder: https://tradewithmaya.com/ Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader DISCLOSURES: Pant has a TSLA bull call spread expiring on March 6, 2026. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
