2017 Investor Roundtable: TSLA Market Action

[bdy0627]

And I'd add to that "unless there's absolutely no way to avoid it, never sell for less than what you paid."

I would actually recommend selling DITM LEAPs at a loss on a big dip to buy higher strike LEAPs.

 

[Navin]

It’s sad that all shorts can do at this point is cry about timing of when Tesla is going to deliver model 3. Cannot question quality, demand, price, etc. this is their last stand. Enjoy it fellas.

 

[bdy0627]

Six to eight weeks is mid November to the beginning of December. That is for the configurator going live. Mid November your 15-20k might be feasible. If they produce 3k per week from mid November that's 18k.

But regardless it looks like the odds of us getting a good entry point to buy J20 just improved !

OTOH If I had a significant number of J18's I'd be looking for a good chance to unload them before the Q3 ER, because it doesn't look like we can count on good news.

Not an advice. I decided to strike out the not an advice because I decided that it's hard to make a mistake being too cautious with expiring options.

My J18s are what I am definitely thinking about given what appears to be potentially a Model 3 delay of several months in terms of Musk's previous best WAG on the ramp. Using the Musk filter when considering his latest tweet about a 6-8 week delay for the configurator, this may very well translate to longer. When he said "assume the worst", I think he may be exaggerating but don't know. If I assume the worst, then I start thinking about the Model X launch debacle. I have a very hard time imagining this gets that bad. But, this feels a bit like when he tweeted about sleeping on the factory floor to fix that ramp. More likely, I would expect Model 3 release to the public to be pushed back a few months. It could easily slip into early 2018. I would expect that to have a significant effect on the stock in the short term. By far the safest approach given all of this is just what you've suggested. Unload the J18s. This could just be a blip of a few weeks without much effect on the stock, but that is a dangerous assumption when holding J18s. I have found out the hard way (more than once now) that any assumptions should be very cautious when dealing with shorter term calls. I don't see any danger for J19s other than the painful recognition that you could have had them a lot cheaper when the stock dips.

 

[MitchJi]

In late 2016 I was planning to buy 2019 LEAPs, I was so worried if the stock would rally before November. Turned out the stock went to $180 twice in Nov. It was a rare gift for us LEAP buyers and share buyers.

I think at this time anything negative (like production delay) is actually good. Let's load up 2020 LEAPs and then let the party start.

If someone can convince the bears to short more...

I did the same thing, bought at $180 too, one of the best investment buys I've ever made!

I think that it might make more sense to buy ITM, or close to the money J19's when you think that the prices have bottomed and roll them to J20's after an increase. ITM J19's will have a higher delta than the same J20's.

The problem with that is that a major reason I'm planning to buy J20's instead of J19's is to get more leverage than I believe is safe with J19's. I should spend some time with an option calculator to compare some different strategies.

 

[AlMc]

I did the same thing, bought at $180 too, one of the best investment buys I've ever made!

I think that it might make more sense to buy ITM, or close to the money J19's when you think that the prices have bottomed and roll them to J20's after an increase. ITM J19's will have a higher delta than the same J20's.

The problem with that is that a major reason I'm planning to buy J20's instead of J19's is to get more leverage than I believe is safe with J19's. I should spend some time with an option calculator to compare some different strategies.

I am sitting on my J19, now DITM Leaps bought at the same time as many others here in the $180-200 Range.
Mitch sold his hoping for a chance to buy J20s when the SP is lower.
I intend to roll mine up and out a bit in November/December.
There is usually a large spread in the bid-ask price when new Leaps come out so for anyone new to Leaps keep this in mind.

 

[MitchJi]

I plan to buy J20 Calls in November. I like deep in the money Calls. Buying how many at what strike price will depend on the stock price and premium. If the stock rallied to a high point at that time, I will buy small amount Call spreads. If the stock is low, I will be more aggressive - buy more and Call only, not spread.

For ITM calls there's no reason to wait if you believe that the SP has bottomed out. It's actually better not to wait because you will make a lot more money on any increase in the interim than you will make with J20's (more options for the same amount of money with a higher delta)!

Unless you think that the SP won't increase until late 2018 or 2019. Check my previous post.

 

[MitchJi]

I am sitting on my J19, now DITM Leaps bought at the same time as many others here in the $180-200 Range.
Mitch sold his hoping for a chance to buy J20s when the SP is lower.
I intend to roll mine up and out a bit in November/December.

There is usually a large spread in the bid-ask price when new Leaps come out so for anyone new to Leaps keep this in mind.

You should carefully compare the prices to determine if you come out ahead if you roll them when the SP is high or low! Someone posted the algorithm to do that. I'll post that if you want me to.

Edit Addition:
Whichever is higher:
(SP /J19 option price) * J19 option delta
(SP/J20 option price) * J20 option delta

The spread didn't matter to me because I bid half way between the bid/ask prices. And within a day of buying when the SP was $180 the option prices had increased way beyond the spread.

 

[EinSV]

Anybody else want in on this 2018 deliveries bet?

Bet ValueAnalyst at your own risk

I would ask that you keep your Seeking Alpha “bets” and discussions with Seeking Alpha users on Seeking Alpha. There is enough FUD around here already without dragging more Seeking Alpha-Ites to this site.

 

[ValueAnalyst]

I would ask that you keep your Seeking Alpha “bets” and discussions with Seeking Alpha users on Seeking Alpha. There is enough FUD around here already without dragging more Seeking Alpha-Ites to this site.

I'm not sure how my post "drags more Seeking Alpha-ltes to this site," but your public criticism is duly noted.

 

[geneclean55]

Its the weekend...maybe go out and enjoy

 

[ValueAnalyst]

Its the weekend...maybe go out and enjoy

View attachment 252435

Ha.. I was waiting for someone do exactly this.

I work 16hr days and usually don't know which day of the week it is, but I'll refrain from posting so often.

 

[MitchJi]

Not sure what you are asking ... I will explain my thought process, a few people on this board are very knowledgeable about how to handle Options. I just write it down and hope all Tesla supporters do well, don't get hurt.

Lets say I have $40,000 cash that I can afford to lose. The stock is at $400. I buy 100 shares and sit on it for many years. End of the story. But if I want more exposure because I am convinced the stock will rally a lot:

Case 1:
I can buy two $190 Jan20 LEAPs which probably will cost $40,000. This gives me 200% exposure but no margin.

Or I can buy 200 shares using 100% margin, (don't laugh, many people do this when they are so sure about a stock's direction). I think Wall Street invented margin to wipeout investors.

The risk for the above two cases are very different. For the LEAP case, if there is a big drop, I cl
an hold or move my Jan20 to Jan21. For the margin case, I might lose it all if there is a big drop.

There are tax implications between the above three approaches: share, LEAP, and margin share.

Case 2:
If the stock is at $400, the $400 Jan20 LEAP would cost around $100. So I could buy 4 LEAPs with more exposure if the stock rally a lot. But in this case I will get time decay, and if there is a big drop, my account becomes very small, I can't do anything about it. I really don't like this approach unless I am 99% sure about a big rally.

In Nov 2016, I bought $190 Jan19 LEAPs, in stead of looking for DITM LEAPs. That's because the stock was very depressed.

The approach I like is mostly buy shares with cash, hold for years. If I think there is a good winning chance, add some DITM LEAPs . I buy out of money Calls only when all the conditions are right, and be ready to sell. I don't hold out of money options for long term. Also, I generally like spreads better than pure options.

Another thought, I feel "Buy Low" is extremely important. We all know this.

What do you think can happen to screw up the next two years, given that Elon is extr.emely confident that Tesla will hit 10k per week production with margins of 25%? Maybe if they borrow too much money for the Gigafactories 3-5 (another SCTY debacle)?

Buying low is crucial for buying LEAPS!

 

[MitchJi]

I would ask that you keep your Seeking Alpha “bets” and discussions with Seeking Alpha users on Seeking Alpha. There is enough FUD around here already without dragging more Seeking Alpha-Ites to this site.

How can anyone who wants this forum to be a useful resource possibly "disagree" with this?!

 

[D-egg-O]

Anybody else want in on this 2018 deliveries bet?

Bet ValueAnalyst at your own risk

This is the kind of crap that tarnishes your reputation on here. It may not be intentional, but I'm letting you know it comes across in a negative way for you.

 

[RABaby]

I'll add my two cents to the betting topic. This is an investment thread where various aspects of TSLA get discussed. There are some off topics that are either tangentially related or at least amusing. The concept of betting someone about the accuracy of their prognostications is kind of sixth grade mentality. The bet is made when one buys TSLA stock or options, and also when they short it. Choosing not to invest, long or short, is equivalent to refraining from a bet for lack of confidence in the direction it will take.

I would suggest that any betting that is discussed on this forum be restricted to how one invests in TSLA and the reasoning behind it. I already placed my bets a long time ago, although I continue to play with options as a sort of side bet. In total I have lost more of those side bets, but I'm learning and doing better.

 

[Navin]

My J18s are what I am definitely thinking about given what appears to be potentially a Model 3 delay of several months in terms of Musk's previous best WAG on the ramp. Using the Musk filter when considering his latest tweet about a 6-8 week delay for the configurator, this may very well translate to longer. When he said "assume the worst", I think he may be exaggerating but don't know. If I assume the worst, then I start thinking about the Model X launch debacle. I have a very hard time imagining this gets that bad. But, this feels a bit like when he tweeted about sleeping on the factory floor to fix that ramp. More likely, I would expect Model 3 release to the public to be pushed back a few months. It could easily slip into early 2018. I would expect that to have a significant effect on the stock in the short term. By far the safest approach given all of this is just what you've suggested. Unload the J18s. This could just be a blip of a few weeks without much effect on the stock, but that is a dangerous assumption when holding J18s. I have found out the hard way (more than once now) that any assumptions should be very cautious when dealing with shorter term calls. I don't see any danger for J19s other than the painful recognition that you could have had them a lot cheaper when the stock dips.

You have to look at tesla as a whole. On the one hand - tesla may delay the m3 a few weeks to iron out the kinks in the production line. On the other hand -1) more folks will qualify for tax rebate, 2) the semi is likely going to be a big game changer on the commercial side and 3) tesla energy is about to go parabolic with awareness, demand and potentially a big contract with Puerto Rico. All of that has to be put in the analysis of Tesla’s stock price because it is all based on future value discounted back to today

 

[Robocop]

Anybody else eyeing Feb / Mar / Apr calls? Seems like Jan19 LEAPS are the standard here, but I think the share price could see quite a large spike this spring assuming the Model 3 ramp-up is anywhere near what Elon predicted. Asking because I often buy calls with 60, 90, 120 DTE, etc. And the Model 3 ramp-up (I hope) will show some stunning progress by April.

 

[kbM3]

This is the kind of crap that tarnishes your reputation on here. It may not be intentional, but I'm letting you know it comes across in a negative way for you.

I disagree. I think @ValueAnalyst has some of the most insightful commentary on TMC and the bets are a fun side thing.

 

[TMSE]

Ha.. I was waiting for someone do exactly this.

I work 16hr days and usually don't know which day of the week it is, but I'll refrain from posting so often.

Quality >> Quantity. Just a suggestion, spend more of thart 16 hours contemplating, meditating, reading and listening. Talk is cheap, silence is golden.

 

[MitchJi]

Anybody else eyeing Feb / Mar / Apr calls? Seems like Jan19 LEAPS are the standard here, but I think the share price could see quite a large spike this spring assuming the Model 3 ramp-up is anywhere near what Elon predicted. Asking because I often buy calls with 60, 90, 120 DTE, etc. And the Model 3 ramp-up (I hope) will show some stunning progress by April.

I believe that June options (which should be safer) will go on sale on the fourth Monday of October.