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My Holding + Trading Approach

TradingInvest

Active Member
Mar 8, 2017
1,699
13,837
USA
I will share my approach on TSLA. It's easy to implement and worked well for me in the past. This "Holding + Trading" approach prevents me from buying high and selling low.

90% for long term investment. Buy and hold only, I expect many fold gain in the next 15 years.

20% for trading. It's for fun, and to give some hard time to the stock manipulators, AI trading programs, etc. Long time ago I realized if I buy high sell low, I would be helping the shorts.

For trading, I mainly buy low sell high. I don't struggle to predict what the stock will do next. I can be patient and don't worry about missing the next rally, because I have at least 90% on the long side even if my trading portion stayed in cash all the time. Because I am relaxed, I tend to get really good deals. Also, if I buy low, I can be patient to see how high it will go.

For the trading portion, I buy shares and options in steps when the stock drops, about 5% for each step.
For example, this is roughly what I did in this round. I still have most of the positions.

+5% in shares @$200
+5% in shares @$190
+5% in 2019 Leaps when stock dropped below $185
+5% in Call Options when it dropped to $180

My overall allocation should be viewed as very aggressive, and it may not be suitable for everyone. This can be modify to be less aggressive. Pick an allocation that works for you.
 

TradingInvest

Active Member
Mar 8, 2017
1,699
13,837
USA
So are you all in on TSLA?

I have a large portion of my net allocated to TSLA. I have other assets for diversification reason.

For the money that's allocated to TSLA, I am now a little more than 100% in. I have not reduced my trading position yet, because it seems to be developing into a breakout. This stock has a high chance to gain significantly in the next few years.
 

ValueAnalyst

Closed
Aug 25, 2016
5,371
12,050
World
I will share my approach on TSLA. It's easy to implement and worked well for me in the past. This "Holding + Trading" approach prevents me from buying high and selling low.

90% for long term investment. Buy and hold only, I expect many fold gain in the next 15 years.

20% for trading. It's for fun, and to give some hard time to the stock manipulators, AI trading programs, etc. Long time ago I realized if I buy high sell low, I would be helping the shorts.

For trading, I mainly buy low sell high. I don't struggle to predict what the stock will do next. I can be patient and don't worry about missing the next rally, because I have at least 90% on the long side even if my trading portion stayed in cash all the time. Because I am relaxed, I tend to get really good deals. Also, if I buy low, I can be patient to see how high it will go.

For the trading portion, I buy shares and options in steps when the stock drops, about 5% for each step.
For example, this is roughly what I did in this round. I still have most of the positions.

+5% in shares @$200
+5% in shares @$190
+5% in 2019 Leaps when stock dropped below $185
+5% in Call Options when it dropped to $180

My overall allocation should be viewed as very aggressive, and it may not be suitable for everyone. This can be modify to be less aggressive. Pick an allocation that works for you.

This is similar to my approach, and I set predetermined valuation parameters using revenue multiples to determine the levels at which I am adding as the share price declines.
 

TradingInvest

Active Member
Mar 8, 2017
1,699
13,837
USA
TSLA dropped $50 in the past 7 days (from 382 to 331). Now it's below 50-DMA. There is a decent chance for a bounce and it's attempting to buy now.

But I know I'm already 100% long. My trading purchase should happen only when the entry point is amazing. I would rather sit and watch at this time. My invest + trading approach prevents me from buying high and selling low.
 

TradingInvest

Active Member
Mar 8, 2017
1,699
13,837
USA
I plan to adjust a little bit. Target 80% for long term holding, 40% for trading. Will sell covered Calls on the current trading shares. If gets called away, will sell Puts to get back in. The option activity only affects the trading portion.
 
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ggr

Expert in Dunning-Kruger Effect!
Supporting Member
Mar 24, 2011
7,016
28,143
San Diego, CA
You know you're mostly talking to yourself, right? 6/9 posts (including this one) from you.
 

eye.surgeon

Active Member
Nov 18, 2014
1,368
2,350
California
I have a large portion of my net allocated to TSLA. I have other assets for diversification reason.

For the money that's allocated to TSLA, I am now a little more than 100% in. I have not reduced my trading position yet, because it seems to be developing into a breakout. This stock has a high chance to gain significantly in the next few years.
3 big investment mistakes: trying to time the market, buying stock based on personal feelings towards the company or a product, and having a large portion of your portfolio in any one company. I'm a boglehead investor, I like TSLA but it's a fraction of my portfolio and I'll check the price after I retire in 20 years.
 
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TradingInvest

Active Member
Mar 8, 2017
1,699
13,837
USA
You know you're mostly talking to yourself, right? 6/9 posts (including this one) from you.

Yes. I intended to talk to myself. That's why I used that thread title. Also I noticed inexperienced investors tend to buy high sell low. Hopefully some of them can see there are ways to avoid the mistake.
 
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TradingInvest

Active Member
Mar 8, 2017
1,699
13,837
USA
It's Friday July 28, I sold out-of-money covered Calls expiring next week (Aug 4th). We will have the Model 3 events tonight and Q2 result on Aug 2nd.

These covered Calls are against my trading shares. It's not terrible if they are called away because these shares' cost is between $180 to 200, and I still have 80% permanent long on TSLA. If we get a drop after the two events, the income from covered Calls will reduce the trading cost a little bit.

I will look for entry points to convert the trading profit to permanent TSLA shares. Maybe by selling Puts.

I think every delivered Model 3 will lead to several new reservations. As the production rate goes up, the waiting list is likely to go longer.
 
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neroden

Model S Owner and Frustrated Tesla Fan
Apr 25, 2011
14,676
63,885
Ithaca, NY, USA
3 big investment mistakes: trying to time the market, buying stock based on personal feelings towards the company or a product, and having a large portion of your portfolio in any one company. I'm a boglehead investor, I like TSLA but it's a fraction of my portfolio and I'll check the price after I retire in 20 years.

My grandmother lived for her entire adult life by stock-picking. She placed large portions of her portfolio in single companies and bought stock of companies whose products she used. (She did, of course, check whether they could make a profit on the product and check whether the stock was overvalued or undervalued, and so forth, but her *first* filter *was* her personal feelings about the company and the product. It's a good filter: buying companies where you think their products suck is usually a terrible idea, because even if it's a profitable business now, if the company's product suddenly becomes unpopular, you will not *notice*.)
 

eye.surgeon

Active Member
Nov 18, 2014
1,368
2,350
California
My grandmother lived for her entire adult life by stock-picking. She placed large portions of her portfolio in single companies and bought stock of companies whose products she used. (She did, of course, check whether they could make a profit on the product and check whether the stock was overvalued or undervalued, and so forth, but her *first* filter *was* her personal feelings about the company and the product. It's a good filter: buying companies where you think their products suck is usually a terrible idea, because even if it's a profitable business now, if the company's product suddenly becomes unpopular, you will not *notice*.)
Thanks for your N of 1 story. People win at craps too but I wouldn't base my retirement on it. Your grandmother would have done a lot better investing in low-cost index funds. See here for details.
 
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GoTslaGo

Learning Member
Dec 25, 2015
3,063
4,740
US
On Monday the stock dropped to $325.8. I bought back my weekly covered Calls on trading shares.

Just want to clarify so I can understand the mechanics.

So on Friday you sold OTM covered calls for X with SP (close) 335.07 [range: 339.60/332.51]. Expiry Aug 4.

On Monday you bought back the same calls with SP 325.8, which should have made the price lower since lower range of Friday was 332.51. The OTM call you sold is now More OTM.

So the OTM call you sold became X-Y, whereupon you bought it back.

Thus profit is Y (minus commission).

Correct me if I'm wrong...

(sorry if this is super obvious to folks, but since I don't trade much in options it's my way of learning... I am a learning member).
 

TradingInvest

Active Member
Mar 8, 2017
1,699
13,837
USA
Just want to clarify so I can understand the mechanics.

So on Friday you sold OTM covered calls for X with SP (close) 335.07 [range: 339.60/332.51]. Expiry Aug 4.

On Monday you bought back the same calls with SP 325.8, which should have made the price lower since lower range of Friday was 332.51. The OTM call you sold is now More OTM.

So the OTM call you sold became X-Y, whereupon you bought it back.

Thus profit is Y (minus commission).

Correct me if I'm wrong...

(sorry if this is super obvious to folks, but since I don't trade much in options it's my way of learning... I am a learning member).

Yes that's what I did. When stock price goes lower, short term Calls drop fast. Sometimes I sit until they expire. These are trading shares, so it's not a big problem if they are called away. I can sell Puts to get in again. In general I don't sell Calls on my long term holdings.

There are two occasions you should not sell covered Calls:
1. The stock is very attractive, ready to rally. Many Tesla holders can tell those occasions such as Feb and Nov of 2016. Those are times to buy Calls.
2. A breakout from a sound base. That is also a time to buy Calls.
 
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jeewee3000

Active Member
Sep 1, 2015
1,220
6,938
Belgium
The stock is very attractive, ready to rally. Many Tesla holders can tell those occasions such as Feb and Nov of 2016. Those are times to buy Calls.

I don't want to be a stickler, but I disagree with the statement above.

If Tesla holders could tell when the stock is ready to rally, we'd all be driving an S and an X right now. For all we know, there might be a post-ER rally starting tomorrow in case Elon spills the beans on detailed future gigafactory plans.

I do like your investing approach though, just wanted to point out the above.
 

neroden

Model S Owner and Frustrated Tesla Fan
Apr 25, 2011
14,676
63,885
Ithaca, NY, USA
Thanks for your N of 1 story. People win at craps too but I wouldn't base my retirement on it. Your grandmother would have done a lot better investing in low-cost index funds. See here for details.
No, she wouldn't have. You're an idiot.

Index funds were INVENTED in 1975, you idiot. They proceeded to massively lose money for several years before they started doing OK in the 1980s.

My grandmother beat the market for 45 years before index funds were invented. Then she beat index funds for decades afterwards. Not by chance. By skill.

She grabbed high-interest-rate long-dated municipal bonds in 1979 at the highest interest rate period in decades, because she'd figured out that the default risk was far lower than people expected and that interest rates would go down again. (How would you like collecting 12% tax free until the mid-1990s?)

She started using discount brokers before most people had ever heard of them.

She called the 2008 crash before it happened.

She was *good* at what she did.

You have been put on "ignore" for being a dumbass.

Index funds are for those who do not want to do stock research. Warren Buffett and my grandmother both would never put their own money in index funds, although they're great for people who aren't professional investors on their own behalf.

You haven't been around here long, because I've told some of the stories before. My grandmother is a woman who read the WSJ every morning and went to the library to research companies, as well as being highly skilled at accounting. If she'd been born in a later, less sexist, era she might have worked as an accountant or an analyst for a Wall Street firm.
 
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