How is that possible? What stocks have even moved +67% since the shutdown started?
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Alternative Energy Investor Discussions
- Thread starter ShortSlaver
- Start date
-
- Tags
- TSLA
Who said anything about stock?
I also manage 3 of my own retirement accounts that are 100% stock, long only, no margin accounts. Since the start of the government shutdown those 3 portfolios, which are buy and hold type accounts (minimal trading and virtually none since gov. shutdown), are up 18%, 20% and 23%.
The point I am trying to make is:
Buy and hold.
Stop trying to time the market, figure out what the politicians are going to do, or figure out what the market is going to do while the politicians are trying to figure out what they are going to do. As far as I know the day that the politicians find a solution, pass a funding bill, and increase the debt limit could be the day that my portfolio loses 5%. That's why I...
...buy and hold.
When I buy and hold, I don't care what the politicians do tomorrow or how the market reacts, because I know that I have done the research and my portfolios are going to be up 100%, and probably a lot more, in 12 months time.
The one 401k that I managed all year had some trades in it, but that was to move from one position to another and not to time the market. I had virtually 100% of cash invested at all times and never held some cash on the sidelines to take advantage of market movements. I never tried to sell at what I thought was a peak, only to hold cash to buy it back later for cheaper. I never "took profits" because of Cyprus concerns, because of Syria, because of shutdown, because of debt ceiling, because I thought we were heading for correction.
That portfolio is up 348% year to date, because I never tried to time the market. I simply bought and held, because I knew the stocks were incorrectly valued and that they had to go up. The worst thing you can do is to watch the stock skyrocket while you were sitting on the sidelines waiting for pullback.
If you know a stock is cheap and you want to invest in it then:
Buy and hold.
If you are afraid the politicians will screw this up, then sell everything you have and sit in cash (not money market) and wait it out. Just don't be surprised to pay a 10% premium after the dust settles.
Good luck to all. I am just trying to help you guys make money and not lose it. What I do is completely different and would not recommend it to anyone. Well, except for the part where I...
...buy and hold.
Mario Kadastik
Active Member
I think if you are long and are afraid of short term crap, then sell calls to hedge. If the market tanks you take the profit from the calls, if it doesn't you buy the calls back at a slight loss. Worst case you'll miss out on some gains. Selling all the shares to re-enter at a possible lower price point is catching the proverbial knife.
And ckessel: I think he's buying stock and options. With options it's easy to gain 67%. My portfolio was down -30% the first day the crap hit the fan, but through buying back some hedges and buying long calls during the dips I was up +30% on the portfolio yesterday. A nice 60% gain in approximately 1-2 weeks. And I think about a third of that gain is realized, not paper profit. If the market tanks tomorrow or on Friday, then I'll buy more options so that when the market recovers in a few weeks I'll be even better positioned and riding it back to current price I will be +50% or more
Now I might buy some insurance for the short term (i.e. weekly puts) to possibly offset a serious crash and burn coming with the talks breaking down in DC, but I'll keep loading up on Nov/Dec options for TSLA and Mar or 2015 options in solars.
And ckessel: I think he's buying stock and options. With options it's easy to gain 67%. My portfolio was down -30% the first day the crap hit the fan, but through buying back some hedges and buying long calls during the dips I was up +30% on the portfolio yesterday. A nice 60% gain in approximately 1-2 weeks. And I think about a third of that gain is realized, not paper profit. If the market tanks tomorrow or on Friday, then I'll buy more options so that when the market recovers in a few weeks I'll be even better positioned and riding it back to current price I will be +50% or more
Now I might buy some insurance for the short term (i.e. weekly puts) to possibly offset a serious crash and burn coming with the talks breaking down in DC, but I'll keep loading up on Nov/Dec options for TSLA and Mar or 2015 options in solars.I do actually consider myself to be a buy and hold investor, especially when it comes to TSLA, I wasn't planning on selling even one share for many years to come. However, all the doom and gloom that the media is portraying regarding the debt ceiling and another 2008 scenario all over again, but worse this time, has made me insecure. Since I'm not that knowledgable on American politics or world economics I have a hard time judging how much is FUD and what scenario is realistic. But thanks for keeping things in perspective!
I wasn't referring to you specifically. I was recommending CSIQ a couple of months ago when it was at $10. Buy and hold would have been the answer. But now that it is at $20, everyone is looking to buy short term options (should have been buying back when they were cheap). They might even payoff big, but the most likely outcome is that you will lose money.
If you want to buy options that is your prerogative, but please do not do it based off what I post here; do your own research before making such decisions. I can highly recommend buying the stock and holding, but options are all on you.
The problem I see is that a lot of people are buying options, who should not be doing it. To make it worse, they are looking at the shortest term options possible. E.g. one poster here bought a Nov $21 call on CSIQ a couple of weeks ago when it was at $16.50. The next day there was a small pullback to $16, and that same person is posting I hope CSIQ gets to $16.85 today so I can sell the Nov. calls I bought yesterday and break even.
Had he just held on to the options (I think he might have; I gave him hints to do so), they probably tripled by now. But more importantly it shows me that he should not be buying short term options with that kind of investment mindset. If you are worried about at least breaking even on options then don't buy them. When you buy options kiss your money goodbye and don't expect to see it again, i.e. only invest an amount that you are comfortable losing. In your assumptions, the base case should be a complete loss and then go from there to decide how much to invest in options.
Now that CSIQ is up 30% in the last two weeks and 100% in the last two months, everybody is getting on board and wants to buy short-term options. Maybe they will pay off, and maybe even pay off big. But your chances of making money are much smaller than the guy who bought his Nov $21 call two weeks ago. Your chances of losing money is a lot bigger now that the stock has gone up so much.
I still think that CSIQ is undervalued and will go up, but I am not sure on what the short term will bring. If their earnings disappoint then the stock may go down 50% and even your deep ITM options will expire worthless and you will lose a lot of money. That is why I recommend buying stock and holding on; eventually I think you will triple your investment and at least double it barring any recession.
If you want to buy options then you should be getting greedy when everyone else is fearful. Now that everybody wants a piece of CSIQ, options are super expensive and will not net you the great returns had you bought last week or two weeks ago or last month. You can still buy stock and sit on it though. Just know that as every day passes by, the risk/reward on CSIQ options is getting significantly worse.
There are a lot of people who made a lot of easy money on TSLA playing options for Q1 earnings, and now I feel like all those who missed out are trying to make up for it by buying extremely risky options on solar. Solar is not a sure-fire bet like TSLA was in Q1, so you can lose big if things don't work out.
Happy investing.
Perhaps it's semantics, but if it's not stock, then what are you buying and holding? All options have a definitive lifetime and thus some intent to time the market. Unless by hold you mean hold for longer than X weeks, which is fine, it just wasn't clear to me from the original context.
You can buy and hold options as well.
What I am saying is that I do not try to time the market by selling today to buy back cheaper tomorrow. This has been the prevailing trend here on the forum and it makes me cringe.
Everyone thought the markets would be down today, but the futures are up almost 1%. That is why I don't play the game of buying and selling to time the market on a daily basis.
Norse
Active Member
rumour out that BoAML has raised PT on TSL from 12$ to 22$!! note RUMOUR!
Anyone with a Merill Lynch account that could verify this please?
Anyone with a Merill Lynch account that could verify this please?
Last edited:
Mario Kadastik
Active Member
Well I bought CSIQ January $14 when it was around the breakout region of $16.5 and have loaded up on more and more during pullbacks. Right now they are nicely deep in the money and I'm contemplating if I should hedge some of them. I've had SCTY January ones as well that have run up nicely and am hedging them for various profit levels that make risk free spreads (35-47.5, 35-52.5). So the buy and hold works quite well for options as well, one just capitalizes partially on hedges that make them risk free. Or you buy 2015/2016 options which are longer term buy and hold strategies. And if the stock moves up significantly the hedging will provide low cost and if there's a pullback due to volatility you can always buy back the hedge making profit from the swings (i.e. re-hedging on the next up swing without losing your core long position).
Yes, exactly this. But I noticed most people here buy the options when the stock is running up 4%, 5%, etc. trying to chase the price. This is a losing strategy for options. This is when you should be selling or hedging them.
Mario - once I create a risk-free spread I let it run. Use the capital to start new option positions that will eventually turn into risk-free spreads hopefully. Keep creating these over and over. Cash out the entire spread when it hits 80% or 90% of max payout.
I do not buy back my hedges, because if you do this then your spread is not risk free anymore.
Would you mind to elaborate a little on this sort of "risk-free spread"? How exactly to build such a spread? With an example would be very helpful. Thanks!
Mario Kadastik
Active Member
Well in many cases the hedge I do is because there's some uncertainty in the short term or the stock has run up "too fast". It's taking the risk off the table for the duration of the uncertainty and if there's a serious pullback I buy the hedge back because if the fundamentals have not changed, then I am back in the initial position where I bought the long position and I'll want to add more long term exposure. So I buy the hedge back at profit and possibly even add more to the initial long position. However to do that the position has to come profitable enough. That's what I did with Tesla where I had hedged my november, december and march calls and when the whole crap started and Tesla dropped to $168 region I bought back the hedges and loaded up on the november calls. Then when the stock bounced back I rode up 4x as fast as I rode down. Now that it's been leveling a bit I hedged some of those new pickups.
For solars I've mostly opened smaller positions (about 10% of my portfolio) and mostly kept them pure longs, but CSIQ has had a nice run up so I was considering heding 40% of my position to lock in some profit.
Also, sometimes during the pullbacks the hedge calls are the ones I'd like to buy for the base long calls
In those cases things just balance out that the first N will actually remove the prior hedge with profit. I could buy the next strike, but that's artificially keeping it separate if I do look at the same expiration.- - - Updated - - -
Example from my spreadsheet:
| 09.10.13 | CALL | TSLA | 25.10.13 | $175,00 | $6,65 | 1 |
| 09.10.13 | CALL | TSLA | 25.10.13 | $175,00 | $4,66 | 1 |
| 11.10.13 | CALL | TSLA | 25.10.13 | $180,00 | $6,10 | -1 |
| 14.10.13 | CALL | TSLA | 25.10.13 | $185,00 | $5,70 | -1 |
Oh it's bull call spread. I thought you were using put to hedge. Very clear! Thanks! Just unfortunately my brokerage doesn't allow me to sell call, except covered call.Example from my spreadsheet:
09.10.13 CALL TSLA 25.10.13 $175,00 $6,65 1 09.10.13 CALL TSLA 25.10.13 $175,00 $4,66 1
11.10.13
CALL TSLA 25.10.13 $180,00 $6,10 -1 The average purchase price of the first two $175 calls is $5.66. Selling 2 days and 5 days later higher strike calls for the same price (or higher in this case) I opened fully risk free call spreads of $175-$180 and $175-$185. Probably should have bought more $175's down there and had some to sell yesterday when TSLA hit $189, could have probably made a third risk free spread of $175-$190 as well
14.10.13
CALL TSLA 25.10.13 $185,00 $5,70 -1
Mario Kadastik
Active Member
Well it depends on how they count it, but if you have two $175 calls that expire on the same day, then selling $180 and $185 calls is covered by the $175 ones Then again I do remember having to scream at my broker that they are idiots at my previous bank. Moving to the new one that uses IB as backend with for me unknown level of access (but I do get all possible transaction capabilities with margin and all that so quite deep) was the best move I could have made. I've been making tons more profit now that I have full market access and can use any strategy I want to make money.
Then again I do remember having to scream at my broker that they are idiots at my previous bank. Moving to the new one that uses IB as backend with for me unknown level of access (but I do get all possible transaction capabilities with margin and all that so quite deep) was the best move I could have made. I've been making tons more profit now that I have full market access and can use any strategy I want to make money.In order to make money in options you need the highest level of clearance (be able to sell naked puts). If you don't have that, then you are doomed to lose money. All of the best and safest options strategies require highest level of clearance.
These levels of clearance make absolutely no sense at all either. You can do covered calls with level 1 clearance, but you need level 3 clearance to sell naked puts.
Naked put is the exact same thing as a covered call.
Mario Kadastik
Active Member
Naked put is the exact same thing as a covered call.
Not necessarily. You take the obligation to buy the stock at price X. Covered call is obligation to sell stock at price X. With a naked put on TSLA your max loss is when the stock bankrupts and can incur hundreds of times bigger loss than the put value itself was. I guess that's why there's a higher level requirement. But I agree, you need maximum flexibility to make money. I still remember how handicapped I was when I was limited to 3 day trades in 5 trading days. Running out of them JUST when something interesting happened and being unable to create new positions was a pain. Also closing a losing deal and being unable to buy back when the trend turns... Argh... I quickly just pulled enough of other reserves together to have the net liquidation above $25k so that I wouldn't have to worry about day trades and that improved a lot even if I wasn't using the money. By now it's all game money anyway and I'm far enough away from 25k that I don't need to worry about hitting that even during a slump with large delta
Gtoffo
Member
SCTY just broke 50$...... this was when I was supposed to re hedge my bull call spread but suddenly I'm not feeling so disciplined (that NEVER happens.... I swear!). The problem is I would be limiting my upside completely as I don't have any more shares in SCTY. Damn Margin calls....;-)
Not necessarily. You take the obligation to buy the stock at price X. Covered call is obligation to sell stock at price X. With a naked put on TSLA your max loss is when the stock bankrupts and can incur hundreds of times bigger loss than the put value itself was. I guess that's why there's a higher level requirement. But I agree, you need maximum flexibility to make money. I still remember how handicapped I was when I was limited to 3 day trades in 5 trading days. Running out of them JUST when something interesting happened and being unable to create new positions was a pain. Also closing a losing deal and being unable to buy back when the trend turns... Argh... I quickly just pulled enough of other reserves together to have the net liquidation above $25k so that I wouldn't have to worry about day trades and that improved a lot even if I wasn't using the money. By now it's all game money anyway and I'm far enough away from 25k that I don't need to worry about hitting that even during a slump with large delta
Naked put is a synthetic covered call.
Covered call is a synthetic naked put.
Essentially the same thing.
If the stock price goes up then the naked put expires worthless and you have no security left in your portfolio. In case of covered call, your stock gets called away and you have nothing left either. Same result.
If price goes down then you will be put TSLA stock and now own TSLA stock. In case of covered call, your short call expires worthless and you are left with TSLA stock. Once again, exact same result.
Depending on what strike prices you buy, a naked put is virtually the exact same thing as a covered call.
Regarding your 100x bigger loss, well that is not possible because your brokerage restricts capital after you sell a naked put to limit your losses.
In order to make money in options you need the highest level of clearance (be able to sell naked puts). If you don't have that, then you are doomed to lose money. All of the best and safest options strategies require highest level of clearance.
These levels of clearance make absolutely no sense at all either. You can do covered calls with level 1 clearance, but you need level 3 clearance to sell naked puts.
Naked put is the exact same thing as a covered call.
My brokerage is different. I'm allowed to buy calls/puts, sell covered calls (must be covered by stocks but not long calls), sell naked puts (needs to be secured I think), but just no naked calls. They said they didn't support option strategies, therefore I can't do something like call spreads.
And they charges $9.95+nX$1.25 for option trading. I'm trying to open an IB account now.
Similar threads
- Locked
