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Paydirt's (TSLA) Option Investing Guide

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juanmedina

Active Member
Mar 31, 2016
2,017
4,833
SC
Ended up buying some October calls. Got very lucky, due to circumstances, was forced to buy after 3pm. Am invested alongside some folks now so cannot disclose the exact position.

Are you still planning to sell your options before the inclusion day?
 

paydirt76

Member
Jun 14, 2020
152
364
USA
When would we know when inclusion day is? Is there any kind of ETA?

Tesla has released their 10-Q. The S&P 500 Committee would have been ready for this and have a gameplan. They may negotiate with Tesla mgmt to see if Tesla will sell some stock to the index funds (to make it easier for index funds to accumulate shares). Depending on how the negotiations go could determine whether we find out the date in a few days or a week or if we find out a date in a month or so. This is speculation on top of rumor.

They could wait hoping that the uncertainty causes the stock price to soften in the interim.

My opinion is it would behoove the S&P 500 index and the funds to do it as quickly as feasible. The latest I would think is they do it for a "quarter end" rebalancing (after 9/18). But I view this as improbable and worst case. It's even more improbable they would do a "staggered" inclusion (doing only 50% of what it should be this quarter, and then the rest next quarter). Even more improbable than that is they refuse to include Tesla if Tesla refuses to sell extra stock.
 
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JusRelax

Member
Apr 24, 2019
930
12,153
Los Angeles, CA
I'm happy to block you if you haven't been happy with my level of transparency in this whole thread.

@paydirt76, the analysis and all of the follow up execution that went along with it that you have provided has been a wealth of knowledge and I believe that many people have found it extremely helpful. Considering that your timing on your calls have been practically impeccable (even if a little luck was involved for some timing calls), anyone following you blindly would have made tons of money making the same moves as you up to this point. Of course, I would never condone that anyone blindly follow someone else's position, but the fact still remains that if someone had done so, they would have made a ton of money.

Even moreso - you provided all of this freely without any possibility for due compensation if things went well (as they did), and definite risk of lots of complaints if things did not go well. I, for one, wanted to say thanks for taking us along for the ride by showing us your positions for as long as you were able to.
 

paydirt76

Member
Jun 14, 2020
152
364
USA
Ended up buying some October calls. Got very lucky, due to circumstances, was forced to buy after 3pm. Am invested alongside some folks now so cannot disclose the exact position.

@juanmedina in case you missed it. ^^^ I also mentioned earlier in the thread how I select strikes (though I didn't write the section on that yet). You can piece it together ;)
 

paydirt76

Member
Jun 14, 2020
152
364
USA
@paydirt76, the analysis and all of the follow up execution that went along with it that you have provided has been a wealth of knowledge and I believe that many people have found it extremely helpful. Considering that your timing on your calls have been practically impeccable (even if a little luck was involved for some timing calls), anyone following you blindly would have made tons of money making the same moves as you up to this point. Of course, I would never condone that anyone blindly follow someone else's position, but the fact still remains that if someone had done so, they would have made a ton of money.

Even moreso - you provided all of this freely without any possibility for due compensation if things went well (as they did), and definite risk of lots of complaints if things did not go well. I, for one, wanted to say thanks for taking us along for the ride by showing us your positions for as long as you were able to.

Thank you. This has all been the culmination of my professional life up until now. The trade/investment of a lifetime. Learned from my misses on Apple & Amazon and was open-minded and curious enough to dig into Tesla with the tremendous help of the broader Tesla community (I named names in an earlier post). This despite being a value investor. We still have incredible insight. Wall Street STILL is refusing to acknowledge the truth in front of them as we watch Tesla expand production in China, Europe, Fremont (Tent 2.0), and now Texas. We can literally count production and know that those cars will be sold.

I am getting bulled up again, and need to rein in my horns... until a couple months after inclusion date.

I am not perfect, as you all can see I can get annoyed. I thank God every day for all of this. Often the prayer is simply, thank you God. I also like the prayer to the Holy Spirit.

I posted all this to share freely so others can benefit, to shake things up, to rebuke old ways of thinking and myths, and to provide a rebuttal to other popular tactics that are costing people money (that is helping to line my pockets). I would rather pay more for market makers to sell me calls and I run over them than be sold calls by Tesla bulls erroneously following a misguided tactic.

The window of opportunity is closing soon, but it may reopen in a few months. For example, if Tesla rolls out FSD to early testers and we see a video and the Tesla is turning good and the stock under reacts, it may be time to get back into 1 year and 2 year calls before the public figures it out, even if stock is up 10% that day.
 

ckessel

Active Member
Jan 15, 2011
4,452
284
@paydirt76 Regarding choosing strike prices. I think what you indicated, if I understood earlier posts, was that if Tesla is aiming at 50% growth per year than a strike price for a LEAP around 25% OTM would make sense. Am I in the ballpark?

So, let's say TSLA drops over the next few weeks before battery day to 1200 (because it makes math nice and round), then I'd want to look at a LEAP would year out around the 1500 strike? Maybe laddered some before and after that?
 

azaz

Active Member
Apr 17, 2016
1,084
2,949
NYC
Thinking about rolling out September calls, or should I keep holding?

really comes down to the timeline for inclusion. @paydirt76 what dates did you end up choosing?
 
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graphilwar

Member
Aug 25, 2019
33
309
Outer Space
I had a hard time picking Sep or Oct 2020 or Jan or Mar 2021 strikes for calls. So I decided to punt and buy Sept 2022 $1500 calls. lol. breakeven is $2065.

there’s so much good news on the horizon for the second half of 2020. then there are some really big product/factory ramps in 2021. plus some non-zero probability of the market waking up to FSD and Energy over the next couple of years.

for me the Sept 2022 LEAP wasn’t the most aggressive but I felt the most comfortable with that timing in terms of juicing the return on top of my core share position.

unfortunately that has left me without a ton of cash, so I need to hustle and make more money so I can have dry powder, heh!
 
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juanmedina

Active Member
Mar 31, 2016
2,017
4,833
SC
Thinking about rolling out September calls, or should I keep holding?

really comes down to the timeline for inclusion. @paydirt76 what dates did you end up choosing?

@paydirt76 I am wondering the same if I should roll my September $1650 call to October or sell it and wait. I saw a tweet where someone said that there will not be a S&P inclusion announcement in August because all the companies need go through their ER's so that the S&P knows who is in or who is out.
 

paydirt76

Member
Jun 14, 2020
152
364
USA
@paydirt76 Regarding choosing strike prices. I think what you indicated, if I understood earlier posts, was that if Tesla is aiming at 50% growth per year than a strike price for a LEAP around 25% OTM would make sense. Am I in the ballpark?

Yes, bless you @ckessel for going thru it all. I think the sweet spot of leverage is where it blows thru your strikes by roughly an equal amount that it used to be out of the money.

As far as what I call laddering. I am meaning expirations which I think you get... putting all these thoughts together, a year out 25% higher strike is fine, two years out 62.5% (1.25 x 1.25) is fine. These either need to be YOLO or risk managed. There is a time where the stock will fail.

With how strange thinking still is (perhaps a vocal minority), I don’t think we are at a peak.
 
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paydirt76

Member
Jun 14, 2020
152
364
USA
really comes down to the timeline for inclusion. @paydirt76 what dates did you end up choosing?

While it is possible they don’t add Tesla, I guess. Worst case is they start the process this quarter (do 50% allocation during their quarterly rebalance). I’ve chosen Oct regular monthly expiration.
 

paydirt76

Member
Jun 14, 2020
152
364
USA
@paydirt76 I am wondering the same if I should roll my September $1650 call to October or sell it and wait. I saw a tweet where someone said that there will not be a S&P inclusion announcement in August because all the companies need go through their ER's so that the S&P knows who is in or who is out.

I don’t think that’s true. If it was true, then why were companies included in May or Feb? Look at this. S&P 500® - S&P Dow Jones Indices

It is possible they wait and decide to do it during quarterly inclusion.
 
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paydirt76

Member
Jun 14, 2020
152
364
USA
Sold my October calls yesterday. They were October 16th 1,500 calls. I put in $1.4M and sold them for $2.7M, making a $1.3M profit. Thank you to the call sellers. Shaky plan is to sit out for a week and a half and reload maybe on August 28th, or possibly reload right after Labor Day. At that time I would buy ATM or 10% OTM October 16th calls and risk less than 10% of my capital.
 
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