2017 Investor Roundtable: TSLA Market Action

[BornToFly]

I used Margin in my account for the first time (since I started trading TSLA 4 years ago) to buy a lot of shares on the recent dip (and amazing buying opportunity). But now I have a question about Margin interest and taxes in my Fidelity account. I'm making money selling Puts and Calls, that I will have to pay tax on. Will I be able to take a tax deduction on the margin interest and offset some of the taxes I will have to pay on my option writing gains? (I believe the answer is yes, but I wanted to be sure and ask people here that have used margin before). For example, if I pay $20k in interest, and earn $100k selling options, do I pay taxes on $80k? Thanks.

 

[Papafox]

I think TSLA is ready to rise above 330 next week, news and macros allowing. If you look at the past two weeks of trading, you will see that the daily trading range has been getting narrower and narrower, with the top of the trading range hanging in there at about 330 and the bottom of the range rising. I wouldn't be surprised to see TSLA rise through 330 on Monday and I think the shorts are worried about this because a close above 330 could lead to 340, which could get lots of weak shorts covering prior to the July 28 Model 3 reveal. Further weakening the position of the shorts is that their manipulative techniques may work well with a descending price and uncertainty, but I don't believe those conditions will exist next week.

What might they do?
* Don't be surprised to see new FUD over the weekend.
* If there's a Monday morning mandatory dip, the shorts may throw in lots of resources, but it could be a nice buying opportunity if you believe next week will be a green week for TSLA.

 

[ValueAnalyst]

I think TSLA is ready to rise above 330 next week, news and macros allowing. If you look at the past two weeks of trading, you will see that the daily trading range has been getting narrower and narrower, with the top of the trading range hanging in there at about 330 and the bottom of the range rising. I wouldn't be surprised to see TSLA rise through 330 on Monday and I think the shorts are worried about this because a close above 330 could lead to 340, which could get lots of weak shorts covering prior to the July 28 Model 3 reveal. Further weakening the position of the shorts is that their manipulative techniques may work well with a descending price and uncertainty, but I don't believe those conditions will exist next week.

View attachment 236937

What might they do?
* Don't be surprised to see new FUD over the weekend.
* If there's a Monday morning mandatory dip, the shorts may throw in lots of resources, but it could be a nice buying opportunity if you believe next week will be a green week for TSLA.

The problem for longs is they've seen a ton of selling from $380 to $300 in recent weeks, and because of this, some weak long will bail earlier than they should on the way up.

FWIW, I'm not selling one share until at least $1,000 unless the fundamentals deteriorate significantly.

 

[AlMc]

The problem for longs is they've seen a ton of selling from $380 to $300 in recent weeks, and because of this, some weak long will bail earlier than they should on the way up.

FWIW, I'm not selling one share until at least $1,000 unless the fundamentals deteriorate significantly.

I disagree. It won't be weak longs that bail on the way up. It will be the traders. They will take a 5-10*% profit and be happy.
I will sell at $900. At least 2/3 of my holdings. Nothing wrong with taking a little profit before we hit resistance at $1k

 

[geneclean55]

Yeah, I don't believe there really are a ton of TSLA 'weak' longs, they are in fact momentum traders looking for quick dollars.

 

[ValueAnalyst]

I disagree. It won't be weak longs that bail on the way up. It will be the traders. They will take a 5-10*% profit and be happy.
I will sell at $900. At least 2/3 of my holdings. Nothing wrong with taking a little profit before we hit resistance at $1k

Disagree all you want, as long as you tell me when you're selling, because I'll be buying your shares. I promise you.

 

[AlMc]

Disagree all you want, as long as you tell me when you're selling, because I'll be buying your shares. I promise you.

Since you contribute here on TMC I will give you a discount. You can buy 2/3 of my position now at $800/share (10% TMC discount)

 

[bdy0627]

I disagree. It won't be weak longs that bail on the way up. It will be the traders. They will take a 5-10*% profit and be happy.
I will sell at $900. At least 2/3 of my holdings. Nothing wrong with taking a little profit before we hit resistance at $1k

Yes, as soon as there is a clear upward trend again, the momentum traders will be back, which is partly what will cause a rapid rise in the stock along with shorts covering. May and early June are becoming a distant memory. I'm looking forward to that again, hopefully soon!

 

[bdy0627]

I think TSLA is ready to rise above 330 next week, news and macros allowing. If you look at the past two weeks of trading, you will see that the daily trading range has been getting narrower and narrower, with the top of the trading range hanging in there at about 330 and the bottom of the range rising. I wouldn't be surprised to see TSLA rise through 330 on Monday and I think the shorts are worried about this because a close above 330 could lead to 340, which could get lots of weak shorts covering prior to the July 28 Model 3 reveal. Further weakening the position of the shorts is that their manipulative techniques may work well with a descending price and uncertainty, but I don't believe those conditions will exist next week.

View attachment 236937

What might they do?
* Don't be surprised to see new FUD over the weekend.
* If there's a Monday morning mandatory dip, the shorts may throw in lots of resources, but it could be a nice buying opportunity if you believe next week will be a green week for TSLA.

I strongly believe any dips this coming week are good buying opportunities. There is a substantial chance more investors/traders will want back in this close to M3. The way the stock has been trading, I don't believe the M3 reveal will be a sell the news event. I'm not sure of the Q2 ER effect but I'm guessing it will play 2nd fiddle here by a long shot to M3.

 

[AlMc]

I strongly believe any dips this coming week are good buying opportunities. There is a substantial chance more investors/traders will want back in this close to M3. The way the stock has been trading, I don't believe the M3 reveal will be a sell the news event. I'm not sure of the Q2 ER effect but I'm guessing it will play 2nd fiddle here by a long shot to M3.

My take (opinion) 0n the next 10-14 days of SP. We will get some rise next week on buy the rumor. IF the handover party presents a surprise; Example, EM does a 'Steve Jobs' after delivering the first 30 cars and delivers 100 more/says ramp is ahead of schedule, then we get a bounce Up and it overcomes what will probably be a Luke warm Q2ER. If no surprise and a lukewarm ER I expect an SP dip. This dip may literally be short lived between the ER and the CC. The CC could be explosive for the SP UP.

 

[Zhelko Dimic]

I strongly believe any dips this coming week are good buying opportunities. There is a substantial chance more investors/traders will want back in this close to M3. The way the stock has been trading, I don't believe the M3 reveal will be a sell the news event. I'm not sure of the Q2 ER effect but I'm guessing it will play 2nd fiddle here by a long shot to M3.

I think that already happened and is what drove it to $386. Too late for positioning, even "sell the news" already happened. But what do I know? Been wrong many times.
Positive surprise could be worth SP increase though

 

[Waiting4M3]

I think TSLA is ready to rise above 330 next week, news and macros allowing. If you look at the past two weeks of trading, you will see that the daily trading range has been getting narrower and narrower, with the top of the trading range hanging in there at about 330 and the bottom of the range rising. I wouldn't be surprised to see TSLA rise through 330 on Monday and I think the shorts are worried about this because a close above 330 could lead to 340, which could get lots of weak shorts covering prior to the July 28 Model 3 reveal. Further weakening the position of the shorts is that their manipulative techniques may work well with a descending price and uncertainty, but I don't believe those conditions will exist next week.

View attachment 236937

What might they do?
* Don't be surprised to see new FUD over the weekend.
* If there's a Monday morning mandatory dip, the shorts may throw in lots of resources, but it could be a nice buying opportunity if you believe next week will be a green week for TSLA.

I observed the same thing, the daily lows this week have all pretty much occurred during the morning dips. Every morning the shorts tried to beat the price down, and everyday they became less and less effective. I think they're running out of ammunition.

 

[neroden]

i have a very newbie, options virtually zero knowledge. as a very committed long, perhaps in the 30+ year range, question
is it in my best interests to tell shorts to sell puts

No. Selling puts is a BULLISH action.

If you wanted them to have massive losses as TSLA goes up (you're mean!), you could be telling them to make either of these bearish best.
(1) BUY puts, and you would be telling them to buy puts which expire as soon as possible. Slightly out-of-the-money puts, like at $350 strikes.
(2) sell CALLS, at very low strikes ($50 or $100) with very distance (Jan 2019) expiration.

 

[neroden]

from stories written about space rail guns,you need a mountain, a slope that can take advantage of the earths rotation, an enclosed tube that can take a partial vacuum for launch facilities and a lot of electricity.

Yep. Musk seems to be designing the tube and the electricity storage already, which is why I've been wondering.

 

[neroden]

Maybe a space-elevator is more likely to happen, although last time I read about the physics behind that the cable needed to be a kilometre in diameter with current materials. Maybe with the advances in carbon recently it's more likely.

The space elevator still can't reasonably be built with existing materials. But from what I can tell the space railgun launcher can. (And if the railgun isn't quite good enough to get to outer space, it can always launch a conventional rocket which can start firing after it's most of the way out of the atmosphere -- probably can't do that with the space elevator.)

 

[ValueAnalyst]

Since you contribute here on TMC I will give you a discount. You can buy 2/3 of my position now at $800/share (10% TMC discount)

Thank you; I appreciate it.

I'll wait until $900, sell one call option contract, and buy $100 shares from you. Sounds like a plan, Stan?

 

[neroden]

I used Margin in my account for the first time (since I started trading TSLA 4 years ago) to buy a lot of shares on the recent dip (and amazing buying opportunity). But now I have a question about Margin interest and taxes in my Fidelity account. I'm making money selling Puts and Calls, that I will have to pay tax on. Will I be able to take a tax deduction on the margin interest and offset some of the taxes I will have to pay on my option writing gains? (I believe the answer is yes, but I wanted to be sure and ask people here that have used margin before). For example, if I pay $20k in interest, and earn $100k selling options, do I pay taxes on $80k? Thanks.

In the US, yes, you will probably be able to take some tax deduction for investment interest. It's quite complicated; basically your deduction will end up being somewhat less than the amount of interest you paid. Look at form 4952. You have to itemize deductions on schedule A, and it's subject to the 3% phaseout for high-income taxpayers. The tax treatment is based on the "purpose" of the loan (in your case, to buy shares and calls). Perhaps most importantly, you probably can't claim it until you actually *pay* the interest, so not until the margin loan is paid off -- if the interest just accumulates, you have to wait until you pay it off to deduct it!

I'm not a tax advisor, so my only advice is: consult with someone who really knows this stuff!

 

[AlMc]

Since you contribute here on TMC I will give you a discount. You can buy 2/3 of my position now at $800/share (10% TMC discount)

Thank you; I appreciate it.

I'll wait until $900, sell one call option contract, and buy $100 shares from you. Sounds like a plan, Stan?

No. I am giving you the discount now. You are the one who predicted not selling till $1k ( or after ).

I am OK if you reject my proposal. In fact, I'll make it $750/share. If you buy before the handover event.

Otherwise. No deal and we stand pat where we are.

I will give you last word on this deal so as not to take up more time on this thread.

 

[winfield100]

No. Selling puts is a BULLISH action.

If you wanted them to have massive losses as TSLA goes up (you're mean!), you could be telling them to make either of these bearish best.
(1) BUY puts, and you would be telling them to buy puts which expire as soon as possible. Slightly out-of-the-money puts, like at $350 strikes.
(2) sell CALLS, at very low strikes ($50 or $100) with very distance (Jan 2019) expiration.

thank you. as i said, i know nothing about options and would lose everything if i ventured there, I shall keep on DCA'in and holding for another 30+ years.
I liked solving problems over my career, and I see certain shorts as akin to "clutching a viper to your chest to bring it back to life and complaining while dying after taking it's poison" when you knew what they were,
so to "solve" that problem once,cleanly and quickly and painlessly, not over and over, just once.
if they are utterly destroyed, "ground into the dust, weeping and wailing lamentations" unto the 7th generation,
it would solve the problem of vexing shorts who desire the destruction of Tesla and in the offering, transfer 99.999% to Tesla for their projects,
I demur upon the appelation "mean" as that brings emotion into the discussion, im more dispassionate kinda easy going guy, beloved by many at times . i'm really old, born in the late 1940's, in pain all the time and desire a life of peace and comfort, many shorts threaten that, and you don't have to aim a hellfire blaster that well. i'm too old for otherwise, sorry for rambling, but you called me mean, i just want to solve the shorts as quickly as possible, so we can save the planet for our grandchildren

 

[EinSV]

<snip> ,
so to "solve" that problem once,cleanly and quickly and painlessly, not over and over, just once.
if they are utterly destroyed, "ground into the dust, weeping and wailing lamentations" unto the 7th generation,
it would solve the problem of vexing shorts who desire the destruction of Tesla and in the offering, transfer 99.999% to Tesla for their projects, <snip>

That probably won't work, unfortunately. Why not? It already happened once and yet here we are.

In late 2012 Tesla had a short interest that peaked at 62.5% of float and it stayed up around 50% in early 2013. Then shorts got utterly slaughtered in 2013-14 -- Whitney Tilson describes shorting Tesla from $35 up to $205 the most painful experience of his investing career, and no wonder.

Did that solve the problem? No -- it just spawned a fresh new crop of shorts who eventually jumped in at the next price level thinking this time it really is a bubble (and a few stubborn diehards probably still hung around with 1000% losses). So I don't think another good whuppin' will necessarily do the trick all by itself.

At a certain point if Tesla keeps growing at a rapid clip and is cash flow neutral I think short interest will likely come down to more normal levels -- something like 5-10% of where it is today as a percent of float. That's my best guess anyway ....