2017 Investor Roundtable: TSLA Market Action

[erthquake]

And the market is probably going to spank Fiat-Chrysler with a bigger paddle whenever the opportunity is convenient for their diesel emissions issues......................there are a LOT of Jeep and Ram 3.0 diesels on the street around the globe, and this party is just warming up!

I just completed the buy-back process for my parents TDI wagon for their estate - they both passed away this last year - and the process was painful. It took longer to get the VW buyback completed than it did to sell their house. I have a reoccurring bad dream that I will need to repeat that process someday for our Mercedes Sprinter RV with the 3.0 diesel. So from my perspective if the Fiat-Chrysler emissions issue is true.......spank away!!!!!!!!!!!!

Sorry for your loss. Best wishes.

 

[EinSV]

Every once in a while it is interesting to sell out/go to cash and observe how my psychology around the TSLA ticker changes. It is a kind of good way to judge your position. Suddenly bearish cases make more sense and bullish ones less convincing

That is what we affectionately call "confirmation bias." I hope whoever went to cash a month or two ago is getting a nice dose of it and "feels" like it was the right move and is very happy with their decision.

 

[techmaven]

I just want to point out to people, just as we are near the highs of 2016 today ahead of Q4 earnings report, don't let the highs mess with your head too much and similarly don't let the lows drive you down too much. I think there's some upside left in the short term, but don't forget that we really don't know what is coming on Feb 22nd. I think the 2017 story for Tesla is fantastic no matter what happens later this month, but be careful out there. People tend to buy at the local highs and then sell at the local lows. I've done it before.

 

[racer26]

Every once in a while it is interesting to sell out/go to cash and observe how my psychology around the TSLA ticker changes. It is a kind of good way to judge your position. Suddenly bearish cases make more sense and bullish ones less convincing

That is what we affectionately call "confirmation bias." I hope whoever went to cash a month or two ago is getting a nice dose of it and "feels" like it was the right move and is very happy with their decision.

9 days ago, I pulled out of all of my short term holdings (options expiring sooner than January 2018) due to Trump uncertainty. This left close to half my portfolio in cash. Today I decided to pile that money back into another J18@150 call. Seems safe-ish. Staring at half my portfolio sitting there doing nothing coming up on the ER seemed like a bad idea.

 

[durkie]

The premium certainly does disintegrate, however, rolling should have a thesis. Endlessly rolling and praying isnt usually a great strategy. Especially when one has tax concerns and earnings are two weeks away. Coming into this week, I had very few positions as my friends and I were uncertain of the direction we'd move or if we'd move at all. Its not unreasonable to act on this basis. But as 1k thoughtfully pointed out, the week has proven otherwise. The market is an adjustment game, the environment changed, so should your positioning.

Haha -- I don't know, I feel like it's a decent strategy

So my thesis is:
* It costs almost nothing (and might make me money) to roll
* I only need to roll if the stock is going up (so I stand to make more money if called, i stay a part of the action and i don't get fear of missing out)
* I'm getting paid either way. I feel like the ones who are praying are the people buying options.

But I'm newish to options trading, so I'd love to hear your arguments against it.

 

[MMASSASSIN]

Or roll them forward -- some brokers have tools to make this a semi-automated process, and you may even pick up some extra premium money depending on the new strike/expiry you choose. Rolling forward lets you either ensure that you keep the premium you were originally after when selling the call (if they expire worthless) or you get to sell your shares at that much higher of a price (if they get exercised).

But also, only 2 days left till the 10th. 270 is possible, but those weeklies sure lose value real quick without some momentum behind them.

if the parabolic move materializes , buying covers calls only garnets you to both pay taxes on gains and miss the larger move from short covering rally

MODERATOR: Below is this poster's original thread that had been lost in the duplicate-removal process.

We all know the TSLA short interest is impressively high, but I am awaiting the parabolic action that is sure to follow such a uniq continuing ever increasing pain increase on shorts. We are dangerously close to to max pain short levels as we inch closer to the all time highs but since the interest has been so high for so long there panic may ensue earlier and even here where we stand on the 260 pass clear to with no resistance till 271.23. What im trying to say is, a parabolic move with a 200 point plus rally within a span of weeks if not 2 months to bring us comfortably into the TSLA 480 plus price range is inevitable and immediate once the shorts finally begin to give up. Im not sure if it the TSLA parabolic breakout move begins right now? as the 260 pass must create great discomfort, or if it begins when the 271.23 level is passed or if its reserved to the final all time high point. But what I do know , and those of you in the playground know all to well, is that im aggressively bullishly placed with weekly strategies to capture the highest % gains once the rally truly gets going.

After todays opening TSLA 30 min candle emerged a Doji and the candle there after gave us bullish direction we removed our short call butterfly body protection at 265 with the expectation of a continuation of more volatile nature to emerge after the 2 week sideways consolidation we have had thus far . Ofcorse this overly aggressive TSLA weekly exposure is intraday but with kicker always exposed overnight after todays very telling 30 minute opening candle read us the story of whats to come from here.

 

[EnzoXYZ]

I've been selling since TSLA hit 230 at about every $10 increments-ish. Sold about 1/4 of my holdings now getting mix feelings on the next sell order. I'm really worried about the Q4 numbers as I'm holding more then I would usually at this share price. I would hate to see TSLA tank $20+ because I was too greedy.

 

[Jayjs20]

I'd hate to see that too, considering how I still have double my life's savings in this stock and I just turned green for the first time in 6 months.

So it doesn't bother you at all that you've been selling TSLA since 230 and now it just hit 263?

 

[esk8mw]

And now, a PSA and cautionary tale regarding selling TSLA covered calls. I'm your host, esk8mw.

I sold 260 calls for 1.65 apiece this Monday, expiring Friday...and I just ran my 4.15 stop loss. Luckily I didn't sell too many and only did this as a trial run. I'm not willing to have my stock called away (so I'm not waiting to see if we correct prior to Friday) and we are still solidly in uptrend (so I'm not willing to roll to next week).

Bottom line - selling covered calls on an unpredictable stock forces you to make hard choices when the trade runs against you.

Disclosure: I'm on tilt after a HORRIBLE week+ of trading. I could not have traded the AMZN earnings any worse if I tried to, and followed up with a prolonged short I entered into at a local low that I just closed at another massive loss. I followed up with the terrible TSLA covered calls I just described. For me, the lesson learned (not the first time) is that I should stick with strategies aligned with my long-term view of the stock. I like TSLA and AMZN and should not have entered into a short on AMZN (after expecting an earnings pop!) or a gain-limiting option writing campaign on TSLA during an uptrend. Stupid!

 

[Waiting4M3]

If it tanks after Q4 ER, how long do you guys think it will take for it to bounce back? 6 month? Maybe just out enough $ to take a 6 month vacation somewhere off the grid?

 

[Papafox]

Looking at the technical chart, the upper edge of the bollinger band is right now about 266. We sometimes climb above the upper bb but seldom close above it. For this reason I would use the upper bollinger band as a reasonable indication of where we meet tough resistance. The upper edge of the bb will continue to go up in the next few days, so additional climb this week is possible.

Note: This statement is based upon past history of the stock. Historical patterns can be broken.

 

[Jonathan Hewitt]

Haha -- I don't know, I feel like it's a decent strategy

So my thesis is:
* It costs almost nothing (and might make me money) to roll
* I only need to roll if the stock is going up (so I stand to make more money if called, i stay a part of the action and i don't get fear of missing out)
* I'm getting paid either way. I feel like the ones who are praying are the people buying options.

But I'm newish to options trading, so I'd love to hear your arguments against it.

All this talk should be in trading strategies or advanced options, but the problem with short term options is Gamma Risk. A high Gamma means the delta of the option can change VERY quickly. This means your option you sold for very little can quickly become worth a lot, very quick. This gives a very high risk with little chance of occurring for only a small reward. If you are shorting the calls against stock or calls you are long then yeah, you still make money but was it worth picking up those pennies when you could have had a lot more? Some people are really good at doing this and my hat is off to them because the short term is incredibly difficult to predict.

Many people who sell options avoid gamma risk by closing out of positions way before this close to expiration. Statistics show that selling options ~45 days out and closing them once 50% of the premium has decayed is the optimum method for extracting premium from selling options.

 

[esk8mw]

Next level I'm looking at is 269. I have a hard time seeing us clear that resistance prior to earnings. If we do, I expect us to be sitting right at 280 (ATH) heading into earnings. Then....who knows.

 

[racer26]

Next level I'm looking at is 269. I have a hard time seeing us clear that resistance prior to earnings. If we do, I expect us to be sitting right at 280 (ATH) heading into earnings. Then....who knows.

That's only ~$6 away, and with 10 trading days remaining to ER, I don't think +$6 is outside the possibilities. We're nearly +6 today alone, and Monday we were > +6.

ATH into a positive earnings call could make for interesting fireworks. Guaranteed every short is underwater before hand... if its positive news, they'll want out in a hurry.

 

[esk8mw]

That's only ~$6 away, and with 10 trading days remaining to ER, I don't think +$6 is outside the possibilities. We're nearly +6 today alone, and Monday we were > +6.

ATH into a positive earnings call could make for interesting fireworks. Guaranteed every short is underwater before hand... if its positive news, they'll want out in a hurry.

Getting out my crystal ball here....

I expect a run up to 269, slip back to 255-260, and then nudge back up to 269 before earnings.

If we instead just bust through 269 like it's nothing, I expect us to consolidate around ATH but not break it prior to earnings. It's the nature of stocks to sit right at local highs/lows prior to earnings and then traders choose a direction after the news is out. Usually, a home run (not just a modest beat/decent guidance) is required to push past ATH.

 

[MartinAustin]

...I could not have traded the AMZN earnings any worse...

I did buy a bunch of AMZN a few minutes before the earnings came out... at about $839. Of course I was dismayed to see it open up around $803 or whatever the next morning, but honestly that was down like 3% - chump change in the world of TSLA losses, and it is already back up to nearly $820 so I believe my mistake will be erased shortly.

...don't forget that we really don't know what is coming on Feb 22nd. I think the 2017 story for Tesla is fantastic no matter what happens later this month...

If I recall correctly, the conference call around a year ago was the moment when Elon announced the enormous target of 80,000-90,000 vehicle delivery target for CY2016. People either gasped in admiration or ridicule, but the stock began the amazing Model 3 Reveal rally the day after that call.

We already know the delivery figures for Q4. I believe that revealing CY2017 deliveries guidance, along with the updates on Model 3 execution that analysts are looking for, will propel the stock higher, perhaps even rally above the ATH which is only another 11% higher than where we're at right now. Elon always aims high, and the CY2017 guidance could be amazingly ambitious.

 

[racer26]

If I recall correctly, the conference call around a year ago was the moment when Elon announced the enormous target of 80,000-90,000 vehicle delivery target for CY2016. People either gasped in admiration or ridicule, but the stock began the amazing Model 3 Reveal rally the day after that call.

We already know the delivery figures for Q4. I believe that revealing CY2017 deliveries guidance, along with the updates on Model 3 execution that analysts are looking for, will propel the stock higher, perhaps even rally above the ATH which is only another 11% higher than where we're at right now. Elon always aims high, and the CY2017 guidance could be amazingly ambitious.

We know automotive deliveries for Q4.

We have no idea what SCTY and TE did in Q4, other than the Mira Loma and a few other projects, which should contribute some non-zero number to the bottom line. I believe a bottom-line-profitable 4Q is good news. I believe that the unknowns from ZEVs, SCTY, TE, etc. could get us there.

It has the additional side effect of getting us that much closer to the possibility of S&P500 inclusion by year end.

I'm not sure what I'm hoping for in terms of 2017 guidance.

On the one hand, conservatism would be seen nicely by wall street, setting an achievable goal - on the other hand, impossible goals are what drives this company.

We exited 2016 at an annualized run rate over 100k S/X. I would say reasonable automotive guidance is like ~120k S/X + 50-100k 3.

We know that Model 3's production line has a design capacity around 400k/yr. Thats around 30k/mo. If late-2017 is the benchmark, then I would say ~2 months production is about right for guidance. Of course, they might not give a number for Model 3.

 

[MitchJi]

IMO

I've been selling since TSLA hit 230 about every $10 increments-ish. Sold about 1/4 of my holdings now getting mix feelings on the next sell order. I'm really worried about the Q4 numbers as I'm holding more then I would usually at this share price. I would hate to see TSLA tank $20+ because I was too greedy.

Someday (soon I hope) basing a strategy on past results will break. By 2019 $230 will IMO be really cheap.

If it tanks after Q4 ER, how long do you guys think it will take for it to bounce back? 6 month? Maybe just out enough $ to take a 6 month vacation somewhere off the grid?

I believe *speculation* that it will probably bounce back by the May Q1 ER. Beyond that it's dicey, a minor hiccup on the M3 launch could cause a major dip. OTOH good news on the M3 launch will probably cause a major boost.

 

[Waiting4M3]

We know automotive deliveries for Q4.

We have no idea what SCTY and TE did in Q4, other than the Mira Loma and a few other projects, which should contribute some non-zero number to the bottom line. I believe a bottom-line-profitable 4Q is good news. I believe that the unknowns from ZEVs, SCTY, TE, etc. could get us there.

It has the additional side effect of getting us that much closer to the possibility of S&P500 inclusion by year end.

I'm not sure what I'm hoping for in terms of 2017 guidance.

On the one hand, conservatism would be seen nicely by wall street, setting an achievable goal - on the other hand, impossible goals are what drives this company.

We exited 2016 at an annualized run rate over 100k S/X. I would say reasonable automotive guidance is like ~120k S/X + 50-100k 3.

We know that Model 3's production line has a design capacity around 400k/yr. Thats around 30k/mo. If late-2017 is the benchmark, then I would say ~2 months production is about right for guidance. Of course, they might not give a number for Model 3.

I think M3 delivery guidance (time + quantity) and potential need (or lack of) capital raise are the most important factor. MS/MX delivery in 2017 are important only to the extent to provide cash to build out GGF and M3. Once M3 takes off it should quickly take over as the main driver for future expansion. If Tesla guides significant M3 delivery in 2017, then I think the guidance on MS/MX 2017 delivery would be of much less importance.

 

[MitchJi]

I think M3 delivery guidance (time + quantity) and potential need (or lack of) capital raise are the most important factor. MS/MX delivery in 2017 are important only to the extent to provide cash to build out GGF and M3. Once M3 takes off it should quickly take over as the main driver for future expansion. If Tesla guides significant M3 delivery in 2017, then I think the guidance on MS/MX 2017 delivery would be of much less importance.

If anyone believes them. I think that there's a much better chance of the market believing M3 guidance in May.