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Mario Kadastik
Active Member
Don't be so sure. The amount of shorting that goes on with this stock and the new secondary and other upcoming items probably will establish a good consolidation region and still bring some upside. Short covering will keep the stock up quite a while...
chickensevil
Active Member
I struggled with this today because I feel sentiment is starting to get the better of me. Back when I re-bought in just before the January announcement, I knew it was only a matter of time to hit 200. 200 felt safe. After the announcement I was totally sold going to 200, and bought as much as I could as often as I could and it hit 200 a bit sooner than I could have imagined. Rather than selling as I originally planned, I held on since we still had the Q4. Q4 came out about as great as I expected it to (which was why I held in the first place). Now, here we are still out from a very expected secondary offering, and the uncertainty of the giga-factory. I had said, well if the stock hits 240 I am out... Along comes today, and it just blows past 240 and almost hits 260 today before coming back down. All in the 250s I struggled with the thought... should I sell?
Yes, Tesla is an amazing company, and yes I think that Tesla is going to go places both as a company and as a stock, but let's be honest here, this stock is trading 100% on technicals. I have swallowed a LOT of risk in holding out, and I just don't know if I have the sanity to continue holding. Full disclosure I must sell sometime between now and middle of March... so the question on upside, where is the stock going to go tomorrow? Where is the stock going to go when they announce the factory and offering details? I think I might just ride out tomorrow to see where I feel like a good sell point is, and just let it go. I have already had a 40% return on my whole investment since buying back in, in January.
So honestly, where do you guys feel it might go?
Yes, Tesla is an amazing company, and yes I think that Tesla is going to go places both as a company and as a stock, but let's be honest here, this stock is trading 100% on technicals. I have swallowed a LOT of risk in holding out, and I just don't know if I have the sanity to continue holding. Full disclosure I must sell sometime between now and middle of March... so the question on upside, where is the stock going to go tomorrow? Where is the stock going to go when they announce the factory and offering details? I think I might just ride out tomorrow to see where I feel like a good sell point is, and just let it go. I have already had a 40% return on my whole investment since buying back in, in January.
So honestly, where do you guys feel it might go?
I found the shorts:
http://www.zerohedge.com/news/2014-02-25/tesla-enterprise-value-just-25-below-general-motors
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I don't think we're done yet. By the end of the week maybe.
http://www.zerohedge.com/news/2014-02-25/tesla-enterprise-value-just-25-below-general-motors
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I don't think we're done yet. By the end of the week maybe.
Mario Kadastik
Active Member
Well what I tend to do is to roll up options during days like today. For example I sold my March $225 calls @ $24 (originally bought for $6) and bought $265 calls and some $250 calls so that I had overall a slightly bigger delta than before, but the total cost for the new calls was only ca 60% of the sale value of the $225's. This way I pocketed 40% of cash and my exposure to TSLA didn't change. Then later in the day I sold the $250's as I felt the stock was a bit overextended and bought some $300's. The $250 were up 50% from the earlier buy price and the $300's cost peanuts (~$2.6 a piece) so I only used 25% of the $250 returned money to buy those $300's and my delta reduced slightly. As it came out the $257 (after we hit $259) where I did this was a good time to sell 
Overall today I moved my portfolio from 15% cash and up 40% on initial investment to 33% cash and up 97% on initial investment (my cash now is actually 2/3 of the initial investment). In addition my TSLA delta today is higher than yesterday. Go figure I bought more of those $300 calls as TSLA dropped averaging down as I fully expect another squeeze day tomorrow, but even if I lose it all the gain today (~35% compared to yesterdays portfolio value) far outshines this gamble. And basically moving like this constantly allows me to free up cash and reduce risks. If TSLA were to dip now I have the cash to average down on some longer term options. Another option that I used also near the top was to sell Jan 2015 $390 calls to make my Jan $300 calls into risk free call spreads ($300..$390 risk free in January, what's not to like). But as TSLA plummeted somewhat I decided to buy those back at profit and leave myself higher TSLA exposure for tomorrow. Seems today I essentially timed the top quite well. But of course I should really have held onto my yesterday bought $230 calls instead of selling them at $5, $11.5, $14.5 (*sigh*).
Overall today I moved my portfolio from 15% cash and up 40% on initial investment to 33% cash and up 97% on initial investment (my cash now is actually 2/3 of the initial investment). In addition my TSLA delta today is higher than yesterday. Go figure
I bought more of those $300 calls as TSLA dropped averaging down as I fully expect another squeeze day tomorrow, but even if I lose it all the gain today (~35% compared to yesterdays portfolio value) far outshines this gamble. And basically moving like this constantly allows me to free up cash and reduce risks. If TSLA were to dip now I have the cash to average down on some longer term options. Another option that I used also near the top was to sell Jan 2015 $390 calls to make my Jan $300 calls into risk free call spreads ($300..$390 risk free in January, what's not to like). But as TSLA plummeted somewhat I decided to buy those back at profit and leave myself higher TSLA exposure for tomorrow. Seems today I essentially timed the top quite well. But of course I should really have held onto my yesterday bought $230 calls instead of selling them at $5, $11.5, $14.5 (*sigh*).
mershaw2001
I'm short the short sellers
chickensevil
Active Member
Well what I tend to do is to roll up options during days like today. For example I sold my March $225 calls @ $24 (originally bought for $6) and bought $265 calls and some $250 calls so that I had overall a slightly bigger delta than before, but the total cost for the new calls was only ca 60% of the sale value of the $225's. This way I pocketed 40% of cash and my exposure to TSLA didn't change. Then later in the day I sold the $250's as I felt the stock was a bit overextended and bought some $300's. The $250 were up 50% from the earlier buy price and the $300's cost peanuts (~$2.6 a piece) so I only used 25% of the $250 returned money to buy those $300's and my delta reduced slightly. As it came out the $257 (after we hit $259) where I did this was a good time to sell
Overall today I moved my portfolio from 15% cash and up 40% on initial investment to 33% cash and up 97% on initial investment (my cash now is actually 2/3 of the initial investment). In addition my TSLA delta today is higher than yesterday. Go figure
if and when I ever get into options trading (I am 100% stock right now), I need to learn these finer points of buying across all these spread points. What makes you decide which ranges to buy? And how much do you generally put down across each trade? Like you are primarily talking about 225s 250s and 300s. How much of each would you buy to spread it out, and why? I mean I get the basics of buying and selling call options (puts I still have trouble wrapping my head around properly... so we will just ignore that side of the spectrum) but the logic behind the decisions is what gets me. My perspective on calls is you would buy a bunch of, say 255's and hold em until they mature and you get whatever the returns are, but it seems like you are taking the perspective to constantly trade your contracts so you are making all your money on the change in the premiums for those contracts. Do you ever take a contract to expiration and/or execute the contract to flip the stock? Like if your break even on a contract was at 225 and it rose to 250 (like it did today), would it be better to execute the contact and flip the stock (banking a 2500 win per contract) or to just sell the contract off to someone else at the change in premium value?
Causalien
Prime 8 ball Oracle
Well what I tend to do is to roll up options during days like today. For example I sold my March $225 calls @ $24 (originally bought for $6) and bought $265 calls and some $250 calls so that I had overall a slightly bigger delta than before, but the total cost for the new calls was only ca 60% of the sale value of the $225's. This way I pocketed 40% of cash and my exposure to TSLA didn't change. Then later in the day I sold the $250's as I felt the stock was a bit overextended and bought some $300's. The $250 were up 50% from the earlier buy price and the $300's cost peanuts (~$2.6 a piece) so I only used 25% of the $250 returned money to buy those $300's and my delta reduced slightly. As it came out the $257 (after we hit $259) where I did this was a good time to sell
Overall today I moved my portfolio from 15% cash and up 40% on initial investment to 33% cash and up 97% on initial investment (my cash now is actually 2/3 of the initial investment). In addition my TSLA delta today is higher than yesterday. Go figure
I don't do pure directional trades. So on days like these, I simply complete the construction of my option strategy knowing that no matter what, I will not lose money. I think in general, the forum is going into euphoria with Options now and I feel guilty helping introduce them to people because some have no business playing with the financial equivalent of an atom bomb.
What I am saying is. People who doesn't have at least 3 years of experience in options and are buying far OTM options with their life savings in only one direction. You are gambling. If you are gambling, it is far better for you to take out a huge bank loan and buy stock than to use far OTM weekly options. Same leverage, more control. Playing options as a uni directional bet is a waste of options.
My 2 cents. And note, I tend to buy and hold stocks, not trade in options. Mostly because I don't have the time and energy to learn options and track stocks like I think an options trader has to.
Stock ownership is betting, pure and simple. In the long run, the value of the stock *should* converge on the fair value of the stock so fundamental analysis makes sense for buy-and-hold types. In the short-run, there's no such guarantees. It's all about perceived value which can be completely divorced from reality. That's where technical analysis can make sense -- it's about analyzing and predicting short-term investor behavior in the absence of any real news.
There's something of an unknown between now and mid-March - the Gigafactory announcement. That could send the price up, down or do nothing depending on how much people have already guessed about the content.
It looks like the last of current dominoes have fallen from the earnings announcement and now we're just waiting for the Gigafactory announcement.
If you want to bet that the Gigafactory announcement will send the stock up, hold and sell a day or two after. If you're afraid that the announcement will be a let-down, sell now.
If you're not sure and are willing to straddle the fence (hedge), sell 1/2 now and the rest after.
Either way, if you're going to have to sell by Mid-March anyway, I'd recommend selling very soon. Reason being that I don't know of any potentially positive news other than the Gigafactory announcement timed to hit before Mid-March whereas unforeseen negative news could hit at any time, driving the price down.
There's a difference between using options to reduce risk (e.g. hedging), that is, reducing your exposure to price movements, and using options to try to increase exposure to price movements. That said, I think there's a more important difference between gambling and high-leverage investing. If you've done your research and think you have reason to see a change in the underlying stock price, then I think the "increase exposure" use of options makes a lot of sense. At the other extreme, putting your chips on 00 at the roulette wheel is gambling: you don't have any reason to believe 00 is more likely than any other number to show up.
Investing in TSLA or TSLA derivatives because "they always go up" is probably a very risky strategy, though. Nothing always goes up. While TSLA may end up in the 300s by the end of the year, the path there is anything but obvious.
Investing in TSLA or TSLA derivatives because "they always go up" is probably a very risky strategy, though. Nothing always goes up. While TSLA may end up in the 300s by the end of the year, the path there is anything but obvious.
I've got a stupid question: how it is possible to construct even a daily options trading strategy that won't lose money? In general, that's the financial equivalent of a perpetual motion machine.
Is it because there are price differences in different options that you can spot and arbitrage?
If that's what you're doing, then I can see why you're saying 3 years experience required, minimum.
Mario Kadastik
Active Member
You expect the price to go up and buy OTM calls. Then the price goes up and the calls track the movement up. You have two choices (simplifying) you either sell the calls you bought and take the profit (the move up was always lower on the options in absolute value than the underlying so if you wait until expiry and the stock goes up further you could have gotten more, oh well). Or you sell a higher strike call for the same amount that you bought the original call for. Now you have a risk free spread because you have taken out your initial investment. The difference in the strike prices is your maximum profit if the stock moves higher than the strike price you sold.
Causalien: it's not gambling. If I have limited amount of funds, but I do know that TSLA is going up > 50% probability (post Q4 delivery numbers and pre-ER for example there was very little doubt it'll go up and trigger a squeeze) then buying options that are OTM at various expirations and strikes is a far cheaper way to create a large TSLA exposure in delta. As an example my TSLA exposure right now is at a delta of 750. At the same time my investment in the options is ~$20k. At $20k I could have bought only 100 shares. So I'm leveraging 7.5x for the dollar value.
And I do hedge as well. Making risk free spreads (I have for example a Jan 2016 $140..$225 spread, which is risk free etc), but for a MoMo stock during the MoMo action the rolling of options is more profitable because I can skim 20-30% of the cash out of the trade while keeping the delta. So I keep moving along with the stock, but constantly funnel cash out and without too much need can take all of the initial investment out of the options AND still keep the delta. That's pretty much what I've done right now. I could let the rest of the options ride and not lose anything with regard my initial investment, but I would lose the current value. So I'm likely to start hedging at some point or cashing out some more calls that have run up nicely (I did sell half of my March $300 calls today at 100% profit, bought them yesterday).
So, to be clear, you can't start with a risk-free spread. You start with an exposed position, and after the passage of time and movement of stock price, take actions that remove the risk and lock in a profit.
Causalien
Prime 8 ball Oracle
Mario, I am not targeting you directly and just used your posts as a scapegoat. I am worried from all the posts from newbies buying far OTM options that are also asking, at the same time, what will happen to it at certain prices. Indicating that they have not the faintest idea about options. This is the same warning I am giving to people before the Q3 2013 conference call, because exuberance is on this forum again and we are seeing the same trend in the kind of posts that are appearing.
But it also serves as a warning to some of us to re-check our premises. Have we grown reckless? Have we deviated from sound options trading?
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The initial positions are not risk free. My TSLA positions have grown to a Franken option spanning about 20 different positions. I have always constructed them to eventually be able to become risk free on either side. So yesterday, I closed the risk of going down on the bull side and decided to let the time premium collapse until expiration date. i.e. Taken the route of predictable earnings until expiration instead of exposing myself to potentials of upside. It's not a Jedi move. I just decided I am not a pig.
To RCC:
It is possible to construct such a thing that doesn't lose money with a guaranteed return. In a joint investigation before the April 2013 by members on this forum, we latched on to a very particular options activity, the options premium skew in call and put, ~50% interest you can earn if you lend out your shares, members on this forum who's DITM call options were exercised early (which never happens) as well as the short interest higher than float.
I spent a week tracing all the options to eventually discover the reason why this is happening and it turns out that they are all related to an options structure that you can do in which you are guaranteed a 20% return. Which leads to infinite shorting and in turn leads to no shares being available to lend out which in turn leads to the high interest to lend out your shares. It was in the short squeeze thread I believe and is quite an epic journey.
But it also serves as a warning to some of us to re-check our premises. Have we grown reckless? Have we deviated from sound options trading?
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The initial positions are not risk free. My TSLA positions have grown to a Franken option spanning about 20 different positions. I have always constructed them to eventually be able to become risk free on either side. So yesterday, I closed the risk of going down on the bull side and decided to let the time premium collapse until expiration date. i.e. Taken the route of predictable earnings until expiration instead of exposing myself to potentials of upside. It's not a Jedi move. I just decided I am not a pig.
To RCC:
It is possible to construct such a thing that doesn't lose money with a guaranteed return. In a joint investigation before the April 2013 by members on this forum, we latched on to a very particular options activity, the options premium skew in call and put, ~50% interest you can earn if you lend out your shares, members on this forum who's DITM call options were exercised early (which never happens) as well as the short interest higher than float.
I spent a week tracing all the options to eventually discover the reason why this is happening and it turns out that they are all related to an options structure that you can do in which you are guaranteed a 20% return. Which leads to infinite shorting and in turn leads to no shares being available to lend out which in turn leads to the high interest to lend out your shares. It was in the short squeeze thread I believe and is quite an epic journey.
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Mario Kadastik
Active Member
JRP3
Hyperactive Member
Not an unrealistic stance, but did you forget about the likely upcoming positive NHTSA report? That will probably bump the price even further, unless you are expecting a negative report.
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