Blind Faith Price Targets

[jhm]

You know I've been pretty down on trying to use options with BFPT. Mostly I have gotten burned on expiration dates that forced me into a loss. Lately I've been thinking of a fairly conservative way to use leaps. So let me set this out and get some feedback.

I've been keying in on the blessed purchase range from the 10th to 30th percentile. So what happens with this range when you look forward? Consider this range at the end of 2019 for the Nominal Target is $435 to $500. So about the time Jan 2020 LEAPs would expire, the blessed range would be close to this predicted range. (Yes, the distribution can shift a bit, but $435 to $500 is not a bad guess.) Suppose I can buy a $360 call option for about $70. If the stock price is $430 at expiration of the option, then I break even. If the stock comes in at $500, I net $70 on a $70 investment, a 100% return. So basically if the stock is in my blessed zone, I make a 7% to 100% return, and I'd be happy to invest more. If the stock comes in between $360 and $430, I will have lost some money, but whatever value the options retain may be out toward a purchase at below the blessed range. So this is a huge opportunity going forward. Thus, I'm fairly content regardless what the stock price is.

So what about an exit stratgy? I'm not quite sure at what price I would sell the option, but it is easy to set a rule based on sentiment level. Say I'm out at 50th percentile. A year from now, Feb 28, 2019, that median BFPT is about $450. I'm not sure what the option would be worth at that time but it would be $90 plus any remaining time value. It seems it ought to be worth more $140, which would double my money. It would be unusual, if the price remained below the median sentiment line all the way out to Jan 2020. So this exit strategy would like play out before expiration.

So there's the basic idea. It seems fairly modest to me. Any suggestions?

 

[jhm]

Is Tesla Model 3 Actually On Original Schedule? | CleanTechnica

Time is largely an illusion. Here's to long term thinking and the tenacious patience it requires.

 

[bdy0627]

You know I've been pretty down on trying to use options with BFPT. Mostly I have gotten burned on expiration dates that forced me into a loss. Lately I've been thinking of a fairly conservative way to use leaps. So let me set this out and get some feedback.

I've been keying in on the blessed purchase range from the 10th to 30th percentile. So what happens with this range when you look forward? Consider this range at the end of 2019 for the Nominal Target is $435 to $500. So about the time Jan 2020 LEAPs would expire, the blessed range would be close to this predicted range. (Yes, the distribution can shift a bit, but $435 to $500 is not a bad guess.) Suppose I can buy a $360 call option for about $70. If the stock price is $430 at expiration of the option, then I break even. If the stock comes in at $500, I net $70 on a $70 investment, a 100% return. So basically if the stock is in my blessed zone, I make a 7% to 100% return, and I'd be happy to invest more. If the stock comes in between $360 and $430, I will have lost some money, but whatever value the options retain may be out toward a purchase at below the blessed range. So this is a huge opportunity going forward. Thus, I'm fairly content regardless what the stock price is.

So what about an exit stratgy? I'm not quite sure at what price I would sell the option, but it is easy to set a rule based on sentiment level. Say I'm out at 50th percentile. A year from now, Feb 28, 2019, that median BFPT is about $450. I'm not sure what the option would be worth at that time but it would be $90 plus any remaining time value. It seems it ought to be worth more $140, which would double my money. It would be unusual, if the price remained below the median sentiment line all the way out to Jan 2020. So this exit strategy would like play out before expiration.

So there's the basic idea. It seems fairly modest to me. Any suggestions?

I think this would be a conservative way to use LEAPs to enhance your return. If you bought J20 $360s right now, the mid price is $71. If you sold on Feb 7, 2019 with the stock at $450, the price of the option should be about $123, for a 73% return. If you only buy the calls when the stock enters the range below 30%, your risk of losing money is quite low historically. Selling at the median BFPT seems like a reasonable place to sell. What do you do with the money then? Buy shares? I would suggest something along the lines of buying J20 LEAPs with the stock between 20 and 30% and J19 LEAPs if the stock gets below 20%. Alternatively, you could buy waves of LEAPs with the first wave when it dips below 30%, and the 2nd wave below 20%. For selling, you could sell your first wave at 40% and your second wave at the median.

 

[EinSV]

You know I've been pretty down on trying to use options with BFPT. Mostly I have gotten burned on expiration dates that forced me into a loss. Lately I've been thinking of a fairly conservative way to use leaps. So let me set this out and get some feedback.

I've been keying in on the blessed purchase range from the 10th to 30th percentile. So what happens with this range when you look forward? Consider this range at the end of 2019 for the Nominal Target is $435 to $500. So about the time Jan 2020 LEAPs would expire, the blessed range would be close to this predicted range. (Yes, the distribution can shift a bit, but $435 to $500 is not a bad guess.) Suppose I can buy a $360 call option for about $70. If the stock price is $430 at expiration of the option, then I break even. If the stock comes in at $500, I net $70 on a $70 investment, a 100% return. So basically if the stock is in my blessed zone, I make a 7% to 100% return, and I'd be happy to invest more. If the stock comes in between $360 and $430, I will have lost some money, but whatever value the options retain may be out toward a purchase at below the blessed range. So this is a huge opportunity going forward. Thus, I'm fairly content regardless what the stock price is.

So what about an exit stratgy? I'm not quite sure at what price I would sell the option, but it is easy to set a rule based on sentiment level. Say I'm out at 50th percentile. A year from now, Feb 28, 2019, that median BFPT is about $450. I'm not sure what the option would be worth at that time but it would be $90 plus any remaining time value. It seems it ought to be worth more $140, which would double my money. It would be unusual, if the price remained below the median sentiment line all the way out to Jan 2020. So this exit strategy would like play out before expiration.

So there's the basic idea. It seems fairly modest to me. Any suggestions?

I have been reassessing my own dabbling with options so can provide my own very personal perspective/thought process (not advice).

The return on my account that contains a mix of stock and options has been significantly higher than a separate pure "buy and hold" account. But given the skyrocketing share price it would have been hard not to do much better with some options in the mix. I have concluded the added returns are not enough to justify the significant added risk, so I am planning to gradually dial it back.

One concern I personally would have with adopting your strategy is that Tesla could do very well by most standards -- say a 20% return -- and I could lose money. A solid 10% return and I would basically have that part of my TSLA holdings wiped out. That's bad.

And the psychological effects of losing money or just breaking even when the stock is rising might tempt me to make bad decisions and sell when I should be holding, or try to double down to recoup losses. Although I am cool as a cucumber with stock and have had great luck buying the dip, with options I have found I am not and tend to make more emotional investment decisions that lead to worse outcomes than they should be. And this has been in a very favorable environment where the share price overall has been rising dramatically, but with lots of ups and sustained downs. I suppose by religiously following the BF guidelines I might be able to take some of the emotional response out of the equation, but the question I would have for myself is when the going gets tough would I really be able to do that? Or would I get frustrated and convince myself that there is a better investment strategy and switch courses.

Another factor that worries me is that the next couple years look especially precarious from a macro perspective. Every asset everywhere seems overvalued (slight exaggeration to make a point) and we seem long overdue for a correction. The political environment seems more unstable than it has been in my lifetime. So it seems to me there is a higher than normal risk that even if Tesla does as well as a company as I expect it to, the stock might not for a few years.

I was bored and watched a Warren Buffett bio-documentary on a plane recently, and was reminded that his first rule of investing is "Never lose money" and his second rule is "Don't forget rule number 1."

Those are hard if not impossible rules to follow when playing with options. I personally hate the idea of wiping out some of my TSLA portfolio in the short term. That would limit the long-term opportunities, which seem enormous.

Tl;dr: I will probably gradually transition to have almost all of my TSLA in shares with a small percentage set aside to convert back and forth between shares and DITM LEAPs to take advantage of dips. This way I am not putting too much at added risk or losing much $ on premiums. Also, performance of DITM LEAPs closely tracks share price which essentially eliminates the disconnect between option performance and SP from the equation. I think that is probably a good fit with my risk tolerance and personality. But everyone is different so taking on more risk might pay off for you.

 

[bdy0627]

I have been reassessing my own dabbling with options so can provide my own very personal perspective/thought process (not advice).

The return on my account that contains a mix of stock and options has been significantly higher than a separate pure "buy and hold" account. But given the skyrocketing share price it would have been hard not to do much better with some options in the mix. I have concluded the added returns are not enough to justify the significant added risk, so I am planning to gradually dial it back.

One concern I personally would have with adopting your strategy is that Tesla could do very well by most standards -- say a 20% return -- and I could lose money. A solid 10% return and I would basically have that part of my TSLA holdings wiped out. That's bad.

And the psychological effects of losing money or just breaking even when the stock is rising might tempt me to make bad decisions and sell when I should be holding, or try to double down to recoup losses. Although I am cool as a cucumber with stock and have had great luck buying the dip, with options I have found I am not and tend to make more emotional investment decisions that lead to worse outcomes than they should be. And this has been in a very favorable environment where the share price overall has been rising dramatically, but with lots of ups and sustained downs. I suppose by religiously following the BF guidelines I might be able to take some of the emotional response out of the equation, but the question I would have for myself is when the going gets tough would I really be able to do that? Or would I get frustrated and convince myself that there is a better investment strategy and switch courses.

Another factor that worries me is that the next couple years look especially precarious from a macro perspective. Every asset everywhere seems overvalued (slight exaggeration to make a point) and we seem long overdue for a correction. The political environment seems more unstable than it has been in my lifetime. So it seems to me there is a higher than normal risk that even if Tesla does as well as a company as I expect it to, the stock might not for a few years.

I was bored and watched a Warren Buffett bio-documentary on a plane recently, and was reminded that his first rule of investing is "Never lose money" and his second rule is "Don't forget rule number 1."

Those are hard if not impossible rules to follow when playing with options. I personally hate the idea of wiping out some of my TSLA portfolio in the short term. That would limit the long-term opportunities, which seem enormous.

Tl;dr: I will probably gradually transition to have almost all of my TSLA in shares with a small percentage set aside to convert back and forth between shares and DITM LEAPs to take advantage of dips. This way I am not putting too much at added risk or losing much $ on premiums. Also, performance of DITM LEAPs closely tracks share price which essentially eliminates the disconnect between option performance and SP from the equation. I think that is probably a good fit with my risk tolerance and personality. But everyone is different so taking on more risk might pay off for you.

These are really good points to consider. It may be best to use options shorter term, when there is a big unwarranted dip. Buying options at that point is essentially trying to embrace Buffett's rule 1&2. You are way way less likely to lose money on options if you only buy them after a substantial dip. You are also way less likely to lose money on the options you've bought on the dip if you sell them after a moderate rise, even after just a few weeks. Long term, it's probably hard to beat just holding shares. If you sell your LEAPs after a modest profit and buy shares with the proceeds, you've locked in your gain, eliminated your options risk, and enhanced your long term potential by having more shares. I would be very happy if I could use options to eventually double the number of TSLA shares that I have.

 

[generalenthu]

You know I've been pretty down on trying to use options with BFPT. Mostly I have gotten burned on expiration dates that forced me into a loss. Lately I've been thinking of a fairly conservative way to use leaps. So let me set this out and get some feedback.

I've been keying in on the blessed purchase range from the 10th to 30th percentile. So what happens with this range when you look forward? Consider this range at the end of 2019 for the Nominal Target is $435 to $500. So about the time Jan 2020 LEAPs would expire, the blessed range would be close to this predicted range. (Yes, the distribution can shift a bit, but $435 to $500 is not a bad guess.) Suppose I can buy a $360 call option for about $70. If the stock price is $430 at expiration of the option, then I break even. If the stock comes in at $500, I net $70 on a $70 investment, a 100% return. So basically if the stock is in my blessed zone, I make a 7% to 100% return, and I'd be happy to invest more. If the stock comes in between $360 and $430, I will have lost some money, but whatever value the options retain may be out toward a purchase at below the blessed range. So this is a huge opportunity going forward. Thus, I'm fairly content regardless what the stock price is.

So what about an exit stratgy? I'm not quite sure at what price I would sell the option, but it is easy to set a rule based on sentiment level. Say I'm out at 50th percentile. A year from now, Feb 28, 2019, that median BFPT is about $450. I'm not sure what the option would be worth at that time but it would be $90 plus any remaining time value. It seems it ought to be worth more $140, which would double my money. It would be unusual, if the price remained below the median sentiment line all the way out to Jan 2020. So this exit strategy would like play out before expiration.

So there's the basic idea. It seems fairly modest to me. Any suggestions?

My biggest concern with the BFPT framework is that the entire calibration period has been a secular bull market. We are going to see a bear market at some point and that will result in re-calibration of the model. I think you can still use this in the short term if you do not believe in a bear market before 2019. FWIW, I think there is very little chance of a bear market in 2018 and only a relatively small one in 2019.

 

[sundaymorning]

My biggest concern with the BFPT framework is that the entire calibration period has been a secular bull market. We are going to see a bear market at some point and that will result in re-calibration of the model. I think you can still use this in the short term if you do not believe in a bear market before 2019. FWIW, I think there is very little chance of a bear market in 2018 and only a relatively small one in 2019.

I agree, 2018-2019 is looking good.

 

[jhm]

I think this would be a conservative way to use LEAPs to enhance your return. If you bought J20 $360s right now, the mid price is $71. If you sold on Feb 7, 2019 with the stock at $450, the price of the option should be about $123, for a 73% return. If you only buy the calls when the stock enters the range below 30%, your risk of losing money is quite low historically. Selling at the median BFPT seems like a reasonable place to sell. What do you do with the money then? Buy shares? I would suggest something along the lines of buying J20 LEAPs with the stock between 20 and 30% and J19 LEAPs if the stock gets below 20%. Alternatively, you could buy waves of LEAPs with the first wave when it dips below 30%, and the 2nd wave below 20%. For selling, you could sell your first wave at 40% and your second wave at the median.

Cool. I guess covering options into shares near the median would serve to reduce leverage before prices get unstainably high. Most of the advantage in buying in the 10% to 30% range is realized by the time you get to the 50% level. So it's nice to leverage that.

 

[jhm]

Thanks, everyone for your input. I've just bought a J20 @ $360 for $67. So my breakeven is a mere $427 in January 2020. This is about the 3rd percentile, and the blessed range is $462 to $515 after updating my data. So short of a bear market or Tesla black swan, I think this should play out pretty well. At least, it is enough exposure to get me following the LEAP market a little more closely.

One curious thing, the implied volatility for my call is 15% while it is 61% for the associated put. Thus, the bear demand for puts is much higher than bull demand for these calls. The delta is 0.84 for call and -0.37. So the synthetic long has a delta of about 1.11. Put/call parity happens when implied volatilities are equal and the delta on synthetic long is 1.00. Basically, an investor holding shares long-term has an opportunity to hold a synthetic long at lower cost per share. I'm not going to convert my shared over to take advantage of that because I am not an adept option trader and would likely screw things up in execution. But it does mean that calls are underpriced relative to puts. And I am happy to benefit potentially from that imbalance.

 

[generalenthu]

Thanks, everyone for your input. I've just bought a J20 @ $360 for $67. So my breakeven is a mere $427 in January 2020. This is about the 3rd percentile, and the blessed range is $462 to $515 after updating my data. So short of a bear market or Tesla black swan, I think this should play out pretty well. At least, it is enough exposure to get me following the LEAP market a little more closely.

One curious thing, the implied volatility for my call is 15% while it is 61% for the associated put. Thus, the bear demand for puts is much higher than bull demand for these calls. The delta is 0.84 for call and -0.37. So the synthetic long has a delta of about 1.11. Put/call parity happens when implied volatilities are equal and the delta on synthetic long is 1.00. Basically, an investor holding shares long-term has an opportunity to hold a synthetic long at lower cost per share. I'm not going to convert my shared over to take advantage of that because I am not an adept option trader and would likely screw things up in execution. But it does mean that calls are underpriced relative to puts. And I am happy to benefit potentially from that imbalance.

No, there is a mistake in your calcs. If the options are this egregiously mispriced, entire option desks should be fired, but that's not the case.

Put- call parity eqn ignoring interest rates is:

call - put = stock - strike. For today, the values for 360 Jan 2020 options are: 67, 90, 323, and 360.

So there is a gap of -14. Or in other words, for committing to buy at 360 (+360C -360P), you are getting $23 or an effective price of $337, which is above $323 by $14. This translates to roughy 2 years of interest at 2%, because, you don't have to put cash up front if you put on a synthetic. So meh, there is no arbitrage.

In the good old days (scty merger), there were some opportunities. I really don't like the word arbitrage because it implies a risk free trade. And there are very few if any trades that are free of risks. It's always a question of what the risks are and are you comfortable with those. If you don't see risks, you have not looked hard enough.

Anyways, back to scty merger days, the +C - P synthetic was trading at a good discount to spot. It was almost free money. But the catch is, interest rates were lower, and more importantly borrow (for shorting) got tight. Borrow rates were in the low double digits. So the implied borrow was way higher than interest rate. Means, you could actually make money by foregoing the interest on cash and lending your shares. You can also think of that as the cost of foregoing your ability to vote in proxies as only shareholders who own outright can vote. Just goes to show there are too many moving pieces.

Back to your numbers, the IV on both the puts and calls is the same (~38). It's not useful to think in terms of different IVs for puts and calls. It's far better to think of the opportunity cost of owning the synthetic vs common. If I may guess, you reversed the call and put prices, which gave you totally wonky numbers.

 

[jhm]

No, there is a mistake in your calcs. If the options are this egregiously mispriced, entire option desks should be fired, but that's not the case.

Put- call parity eqn ignoring interest rates is:

call - put = stock - strike. For today, the values for 360 Jan 2020 options are: 67, 90, 323, and 360.

So there is a gap of -14. Or in other words, for committing to buy at 360 (+360C -360P), you are getting $23 or an effective price of $337, which is above $323 by $14. This translates to roughy 2 years of interest at 2%, because, you don't have to put cash up front if you put on a synthetic. So meh, there is no arbitrage.

In the good old days (scty merger), there were some opportunities. I really don't like the word arbitrage because it implies a risk free trade. And there are very few if any trades that are free of risks. It's always a question of what the risks are and are you comfortable with those. If you don't see risks, you have not looked hard enough.

Anyways, back to scty merger days, the +C - P synthetic was trading at a good discount to spot. It was almost free money. But the catch is, interest rates were lower, and more importantly borrow (for shorting) got tight. Borrow rates were in the low double digits. So the implied borrow was way higher than interest rate. Means, you could actually make money by foregoing the interest on cash and lending your shares. You can also think of that as the cost of foregoing your ability to vote in proxies as only shareholders who own outright can vote. Just goes to show there are too many moving pieces.

Back to your numbers, the IV on both the puts and calls is the same (~38). It's not useful to think in terms of different IVs for puts and calls. It's far better to think of the opportunity cost of owning the synthetic vs common. If I may guess, you reversed the call and put prices, which gave you totally wonky numbers.

You're correct. I was using greeks from nasdaq.com, which apparently are not so reliable. In any case, if the puts and calls were well priced, I'm content with that.

BTW, one could by this same option today for about $64.

 

[jhm]

Nice day to update BFPT. At $279 today, we are in the 4th percentile of sentiment. So, yes, in the last four years we have seen more abject doubt. The blessed range is $302 - $341. So what does it mean that the price is below that? I view it as a double blessing. The point of the lower value on the blessed range was not to wait around for prices to get lower. But if the market freaks out and gives you lower prices, you can count that as a double blessing. So here are the BFPT.

Nominal $3250

Percentile    Discount    2018-03-27    2018-04-26    2018-12-31    2019-03-27    2019-12-31    2020-12-31    2022-12-31    2025-12-31
4.2%    28.4%     $279      $285      $338      $358      $434      $557      $919      $1,945
2%    29.0%     $267      $273      $325      $345      $418      $540      $898      $1,927
10%    27.4%     $302      $308      $363      $384      $462      $589      $956      $1,977
30%    25.8%     $341      $348      $407      $429      $512      $644      $1,019      $2,029
50%    24.4%     $381      $388      $450      $474      $560      $697      $1,078      $2,076
70%    23.2%     $419      $426      $492      $516      $606      $746      $1,132      $2,118
90%    21.9%     $466      $473      $542      $568      $660      $805      $1,195      $2,165
98%    20.7%     $511      $519      $591      $617      $713      $861      $1,255      $2,208

Sport $5250

Percentile    Discount    2018-03-27    2018-04-26    2018-12-31    2019-03-27    2019-12-31    2020-12-31    2022-12-31    2025-12-31
1.0%    34.8%     $279      $286      $351      $376      $473      $638      $1,159      $2,842
2%    34.6%     $284      $291      $356      $382      $479      $645      $1,168      $2,851
10%    32.9%     $321      $328      $399      $426      $530      $705      $1,245      $2,926
30%    31.4%     $358      $367      $442      $471      $580      $763      $1,318      $2,995
50%    29.8%     $405      $413      $494      $525      $641      $833      $1,403      $3,072
70%    28.1%     $462      $472      $558      $592      $715      $916      $1,503      $3,158
90%    26.3%     $529      $539      $632      $668      $799      $1,010      $1,611      $3,249
98%    25.1%     $581      $591      $689      $726      $862      $1,079      $1,690      $3,312

Insane $7250

Percentile    Discount    2018-03-27    2018-04-26    2018-12-31    2019-03-27    2019-12-31    2020-12-31    2022-12-31    2025-12-31
0.0%    39.3%     $279      $287      $360      $389      $501      $699      $1,356      $3,669
2%    38.5%     $296      $304      $380      $410      $526      $729      $1,397      $3,714
10%    36.9%     $332      $340      $422      $454      $577      $791      $1,481      $3,803
30%    35.3%     $372      $381      $468      $503      $634      $858      $1,571      $3,895
50%    33.5%     $423      $433      $528      $565      $705      $942      $1,680      $4,002
70%    31.4%     $496      $507      $611      $652      $803      $1,056      $1,823      $4,138
90%    29.4%     $576      $589      $702      $746      $908      $1,176      $1,969      $4,269
98%    28.2%     $632      $645      $764      $810      $980      $1,257      $2,065      $4,353

 

[TheTalkingMule]

In the good old days (scty merger), there were some opportunities. I really don't like the word arbitrage because it implies a risk free trade. And there are very few if any trades that are free of risks. It's always a question of what the risks are and are you comfortable with those. If you don't see risks, you have not looked hard enough.

I swore off LEAPs after my SCTY debacle, but just had to check the Jan 2020 pricing today. The SCTY LEAPS down the stretch did feel much "cheaper" than what I'm seeing with TSLA even today. Stock price doubling gets you 4.5x your money or so? That seems irrationally risky to me, even over 22 months.

My hope is that we see TSLA sink a bit more this week and sit there a week or two. IIRC this amount of volatility needs to work itself out a while before LEAP pricing settles down to something rational.

 

[jhm]

Time for the Faithful Blind to look up! The current price of $343 is now in the 23rd percentile under the Nominal target. We have been led through the valley of despair and find ourselves in the middle of the blessed zone. We should not fret if the price should go to $425 nor should we worry much about revisiting prices below $300. By end of 2019 we could comfortably see prices above $500. Onward.

Nominal $3250

Percentile    Implied Discount    2018-06-12    2018-07-12    2018-12-31    2019-06-12    2019-12-31    2020-12-31
23.4%    26.4%     $343      $349      $390      $433      $493      $623
2%    29.0%     $280      $286      $323      $362      $417      $538
10%    27.9%     $304      $311      $349      $389      $446      $571
30%    26.1%     $350      $357      $398      $441      $502      $633
50%    24.7%     $390      $398      $441      $487      $550      $686
70%    23.6%     $425      $433      $478      $525      $591      $730
90%    21.9%     $483      $491      $539      $589      $657      $802
98%    20.7%     $532      $541      $591      $642      $713      $861

Sport $5250

Percentile    Implied Discount    2018-06-12    2018-07-12    2018-12-31    2019-06-12    2019-12-31    2020-12-31
16.0%    32.8%     $343      $351      $401      $455      $533      $708
2%    35.0%     $293      $300      $346      $395      $467      $631
10%    33.7%     $322      $329      $378      $430      $505      $676
30%    31.7%     $372      $380      $433      $490      $570      $752
50%    30.1%     $419      $428      $485      $545      $630      $821
70%    28.6%     $466      $476      $536      $599      $689      $887
90%    26.4%     $552      $562      $628      $697      $794      $1,004
98%    25.1%     $609      $620      $689      $762      $862      $1,079

Insane $7250

Percentile    Implied Discount    2018-06-12    2018-07-12    2018-12-31    2019-06-12    2019-12-31    2020-12-31
12.4%    37.4%     $343      $352      $409      $471      $561      $772
2%    39.5%     $296      $305      $356      $413      $497      $694
10%    37.7%     $334      $343      $399      $460      $550      $758
30%    35.6%     $387      $397      $458      $525      $621      $843
50%    34.1%     $433      $444      $509      $581      $683      $916
70%    32.1%     $499      $510      $582      $659      $768      $1,016
90%    29.5%     $604      $617      $697      $782      $902      $1,169
98%    28.2%     $666      $680      $764      $854      $980      $1,257

 

[bdy0627]

Thanks for the update. Out of curiosity what is the value of your J20 $360 LEAP now? What was the stock price when you bought it?

 

[SW2Fiddler]

Timely update. Love the tags but methinks you meant norminal.

 

[jhm]

Thanks for the update. Out of curiosity what is the value of your J20 $360 LEAP now? What was the stock price when you bought it?

It's just recently come into the green. Bought at $67 3/6/2018, now worth $71.

I was definitely not expecting the price would drop to $250 when I bought it. But hey, it's back on track now.

 

[ValueAnalyst]

Time for the Faithful Blind to look up! The current price of $343 is now in the 23rd percentile under the Nominal target. We have been led through the valley of despair and find ourselves in the middle of the blessed zone. We should not fret if the price should go to $425 nor should we worry much about revisiting prices below $300. By end of 2019 we could comfortably see prices above $500. Onward.

Nominal $3250

Percentile    Implied Discount    2018-06-12    2018-07-12    2018-12-31    2019-06-12    2019-12-31    2020-12-31
23.4%    26.4%     $343      $349      $390      $433      $493      $623
2%    29.0%     $280      $286      $323      $362      $417      $538
10%    27.9%     $304      $311      $349      $389      $446      $571
30%    26.1%     $350      $357      $398      $441      $502      $633
50%    24.7%     $390      $398      $441      $487      $550      $686
70%    23.6%     $425      $433      $478      $525      $591      $730
90%    21.9%     $483      $491      $539      $589      $657      $802
98%    20.7%     $532      $541      $591      $642      $713      $861

Sport $5250

Percentile    Implied Discount    2018-06-12    2018-07-12    2018-12-31    2019-06-12    2019-12-31    2020-12-31
16.0%    32.8%     $343      $351      $401      $455      $533      $708
2%    35.0%     $293      $300      $346      $395      $467      $631
10%    33.7%     $322      $329      $378      $430      $505      $676
30%    31.7%     $372      $380      $433      $490      $570      $752
50%    30.1%     $419      $428      $485      $545      $630      $821
70%    28.6%     $466      $476      $536      $599      $689      $887
90%    26.4%     $552      $562      $628      $697      $794      $1,004
98%    25.1%     $609      $620      $689      $762      $862      $1,079

Insane $7250

Percentile    Implied Discount    2018-06-12    2018-07-12    2018-12-31    2019-06-12    2019-12-31    2020-12-31
12.4%    37.4%     $343      $352      $409      $471      $561      $772
2%    39.5%     $296      $305      $356      $413      $497      $694
10%    37.7%     $334      $343      $399      $460      $550      $758
30%    35.6%     $387      $397      $458      $525      $621      $843
50%    34.1%     $433      $444      $509      $581      $683      $916
70%    32.1%     $499      $510      $582      $659      $768      $1,016
90%    29.5%     $604      $617      $697      $782      $902      $1,169
98%    28.2%     $666      $680      $764      $854      $980      $1,257

Thank you for updating this model. What are the annual dilution assumptions per version? Elon clearly stated that Tesla neither needs nor wants to raise capital, so are the dilution assumptions finally at zero, and maybe even negative (i.e. share buybacks) for later years?

 

[ggr]

Buybacks are for when you have nothing better to do with the cash. I think that is the VERY far future for TSLA. There is still dilution from employee stock options though.

 

[Lessmog]

Buybacks are for when you have nothing better to do with the cash. I think that is the VERY far future for TSLA. There is still dilution from employee stock options though.

VERY FAR, as in Mars?
BTW, what will the currency be called -- marsuperials? Marsmarks? Ooh wait: Mars Mallows!