Paydirt's (TSLA) Option Investing Guide

[EV forever]

Is anyone willing to step up and admit either losses or confusion regarding this thread, trying to follow it, or the OP?

Didn't lose any money, and made quite a bit more following his strategy than I would have otherwise on my own. He did change my perspective in looking at premiums in context of IV.
Also sent him a PM at that time to thank him for his insights. Wish he would return here and post some more.

 

[mrmage]

This sounds interesting, thanks for sharing

Can you give me an example of some of the transactions you made so I can learn and explore if this is potentially a superior strategy for me?

Thanks in advance

My current project is to find a way to conservatively make profits whether the stock goes up or down, even with extended pullbacks and consolidations. My current idea is to profit off the time decay of the high IV. I wouldn't recommend a whole portfolio like this, but a portion of it might make sense.

Some examples of ITM spreads when SP was around $350:

Nov 20 2020 280/320 for about $20 (100% max profit)
Jan 2021 280/320 for about $20 (100% max profit)
Jan 2022 300/350 for about $17 (~200% max profit)

This calendar spread looked interesting so I picked that up. I may have picked an expiration date that's farther out than I should, but the profit curve at expiration looks nice.

Jan 2022 / Jun 2022 700 for about $17
(~700% profit if Tesla SP is near 700 at expiration, but profitable almost everywhere from $350 up)

 

[enzo]

Wish I had studied this thread earlier, but I think it is still very relevant, though possibly not for long.

Can anyone offer their LEAPS planning spreadsheet as inspiration? (Believe all should make their own, but I am new to it)

Hope @paydirt76 will stop by again.

 

[MABMAB]

Wish I had studied this thread earlier, but I think it is still very relevant, though possibly not for long.

Can anyone offer their LEAPS planning spreadsheet as inspiration? (Believe all should make their own, but I am new to it)

Hope @paydirt76 will stop by again.

Perhaps paydirt was a salesman, made his bones, then left

 

[enzo]

Perhaps paydirt was a salesman, made his bones, then left

Or he is busy looking at houses or vacationing with his millions, which is fine! It sure would keep me off the computer.

 

[mrmage]

Wish I had studied this thread earlier, but I think it is still very relevant, though possibly not for long.

Can anyone offer their LEAPS planning spreadsheet as inspiration? (Believe all should make their own, but I am new to it)

Hope @paydirt76 will stop by again.

What are your assumptions about the current market, like volatility, SP targets / time frames, and confidence level? Strategies only work when their underlying assumptions are true.

TSLA is now 150% higher than when this thread was started 4 months ago. If you feel that will happen again, the past strategies would work.

I don't see that repeating though. Tesla won't have a $1T market cap in 1Q 2021.

The stock market offers opportunities at certain times. I take advantage of those when they happen. I have no control over when or what.

Not sure what tools you're using, but I recently started using TD's web based thinkorswim and like its visualization tool.

 

[Cherry Wine]

Perhaps paydirt was a salesman, made his bones, then left

He posted screenshots of his positions / account. Selling what, exactly?

 

[MABMAB]

He posted screenshots of his positions / account. Selling what, exactly?

I have been actively involved in the market for greater than ten years, seen some fraud and attempts to scam, documented one such attempt.

after stirring up interest here, he was unwilling to discuss publicly or privately on tmc, wanted to do such elsewhere.

the OP tried to get me onto one social media platform to discuss his strategies, then tried to get me to go onto a different platform, each of these moves raised my bs detector. I found the OP just a little lacking in info given, as a resource to better understand options he did offer one website. He ended up blocking me from Twitter, switched to a different twitter account also. He brought forth a trading plan, then failed to execute on the plan, might have left others in the lurch. He left the trade early, perhaps after stirring up some dumb money here.

screen shots easy to make on fake and demo accounts.

he blew in here from. No where, offered homage to those that came before him for all their hard work but failed to give me any specifics about this.

in private discussions his main emphasis seemed to be advocating leaving long standing safe positions and buying out of the money options DAYS Before He Sold Out and left tmc.

I don’t know that he was a fraud, but I heard him quack like a duck...
Frauds offer some truths whilst offering outsized returns.

 

[enzo]

@MABMAB Can't disprove your personal experience, but I think more likely what happened is: he became (more) financially independent, wanted to be benevolent but also prove to himself that the experience was not luck, was grounded by a set of principles and in fact replicable. But the success got so far out of hand that he realized too much at stake, how can it possibly happen a 3rd time, etc. As for the social media, he was probably just trying to remain semi-anonymous and protect himself, as he was giving financial advice. Hence the whole "my friend" thing.

@mrmage I am on thinkorswim desktop, will try web app too.
As for assumptions, I am a long term investor, so the real question is whether I can truly remain a long term investor if I start thinking in terms of vega, time frames, etc. This was paydirt's original argument, that the community here of investors operates with special wisdom regarding TSLA, but we can switch to LEAPS without compromising on this core wisdom, provided careful planning and risk delineation. After spending last night tabulating and researching, I can definitely see why some disagree, because it is very nerve wracking. I have 100 shares, and going to LEAPS could result in the end of my TSLA investing life, or give me a degree of financial independence.

 

[mrmage]

@mrmage I am on thinkorswim desktop, will try web app too.
As for assumptions, I am a long term investor, so the real question is whether I can truly remain a long term investor if I start thinking in terms of vega, time frames, etc. This was paydirt's original argument, that the community here of investors operates with special wisdom regarding TSLA, but we can switch to LEAPS without compromising on this core wisdom, provided careful planning and risk delineation. After spending last night tabulating and researching, I can definitely see why some disagree, because it is very nerve wracking. I have 100 shares, and going to LEAPS could result in the end of my TSLA investing life, or give me a degree of financial independence.

I'm sure TOS desktop has something similar. I prefer web over apps because I'm logging in from many devices.

I have roughly 1/3 of my TSLA positions in LEAPs, and the rest in stocks /convertible bonds. Although I'm not a heavy trader, I believe all my 80+ LEAPs and medium term options (>6 mos) have been profitable and easily beat TSLA. Not the case for shorter term options (<1 mo)

None of this is a big feat (except consistently losing on near term options must be a talent), because Tesla has gone mostly up since mid-2019. However, I don't think today is like it was a year ago. For example, I picked up 1.5 year LEAPs with strikes at 225% and 150% of SP for 4% and 12% of SP, respectively then:

05/20/2019 12:35:35 Bought __ TSLA Jan 15 2021 300.0 Call @ 24.2
05/08/2019 11:48:02 Bought __ TSLA Jan 15 2021 500.0 Call @ 9

Today, the equivalent LEAPs with strikes at 225% and 150% of SP with 1.5 years expiration are 15% and 25%. This means premiums have increased 2-3x when SP is much closer to ATHs, and the market generally views Tesla favorably.

Now I usually buy spreads so premiums work in my favor, and rarely naked options/LEAPs. If you believe you know the maximum that TSLA is likely to increase each year, spreads will always beat naked calls. In practice, that's hard to gauge so if TSLA goes up 100-200% annually, it's hard to beat naked calls.

But if you want to continue making good returns even if TSLA is range bound or even drops, you may wish to consider spreads as part of your portfolio.

If I was investing now, I'd consider something like these.

Jan 2022 buy 300c/sell 400c 150% at exp even if SP falls 5% from today, breakeven if SP is 15% below today at expiration
Jan 2022 buy 400c/sell 500c 250% at exp if SP is at least 20% higher than today, breakeven if SP is similar to today at expiration

 

[CLK350]

I'm sure TOS desktop has something similar. I prefer web over apps because I'm logging in from many devices.

I have roughly 1/3 of my TSLA positions in LEAPs, and the rest in stocks /convertible bonds. Although I'm not a heavy trader, I believe all my 80+ LEAPs and medium term options (>6 mos) have been profitable and easily beat TSLA. Not the case for shorter term options (<1 mo)

None of this is a big feat (except consistently losing on near term options must be a talent), because Tesla has gone mostly up since mid-2019. However, I don't think today is like it was a year ago. For example, I picked up 1.5 year LEAPs with strikes at 225% and 150% of SP for 4% and 12% of SP, respectively then:

05/20/2019 12:35:35 Bought __ TSLA Jan 15 2021 300.0 Call @ 24.2
05/08/2019 11:48:02 Bought __ TSLA Jan 15 2021 500.0 Call @ 9

Today, the equivalent LEAPs with strikes at 225% and 150% of SP with 1.5 years expiration are 15% and 25%. This means premiums have increased 2-3x when SP is much closer to ATHs, and the market generally views Tesla favorably.

Now I usually buy spreads so premiums work in my favor, and rarely naked options/LEAPs. If you believe you know the maximum that TSLA is likely to increase each year, spreads will always beat naked calls. In practice, that's hard to gauge so if TSLA goes up 100-200% annually, it's hard to beat naked calls.

But if you want to continue making good returns even if TSLA is range bound or even drops, you may wish to consider spreads as part of your portfolio.

If I was investing now, I'd consider something like these.

Jan 2022 buy 300c/sell 400c 150% at exp even if SP falls 5% from today, breakeven if SP is 15% below today at expiration
Jan 2022 buy 400c/sell 500c 250% at exp if SP is at least 20% higher than today, breakeven if SP is similar to today at expiration

Thanks for sharing here.

I am normally just HODL er, but now getting a little impatient (greedy or aware that TSLA is becoming less easy to make gains on) - so today bought (gambled w/good odds IMHO) some Oct 30 calls with the market down, expecting a rebound after better than expected 3Q earnings per Dave on Twitter/YT https://twitter.com/heydave7/status/1312056490572668929

 

[ggr]

What are your assumptions about the current market, like volatility, SP targets / time frames, and confidence level? Strategies only work when their underlying assumptions are true.

TSLA is now 150% higher than when this thread was started 4 months ago. If you feel that will happen again, the past strategies would work.

I don't see that repeating though. Tesla won't have a $1T market cap in 1Q 2021.

The stock market offers opportunities at certain times. I take advantage of those when they happen. I have no control over when or what.

Not sure what tools you're using, but I recently started using TD's web based thinkorswim and like its visualization tool.

Ummm... 1Q 2021 is about 4 months away...

 

[mrmage]

Ummm... 1Q 2021 is about 4 months away...

Exactly. Some people want to buy options because they see the gains for the strategies on this thread. However, there is almost no chance this situation will repeat.

This thread was started 4 months ago, and TSLA shot up 150% from 180 to 430.

To gain 150% in 4 months again, SP would need to exceed $1000 which is a $1T market cap. This won’t happen, which means the conditions are no longer the same.

 

[EV forever]

Wish I had studied this thread earlier, but I think it is still very relevant, though possibly not for long.

Can anyone offer their LEAPS planning spreadsheet as inspiration? (Believe all should make their own, but I am new to it)

Hope @paydirt76 will stop by again.

Check out the Options Trading and Strategy thread. I have posted mine as well as link to FrankSG’s blog which has more elaborate spreadsheets you could download and use as starting point for your calculations.

Options trading strategy/advice

 

[Bet TSLA]

I would never pay much attention to somebody who can't take the trouble to get their spelling and grammar right. Definitely a huckster.

 

[Davidzhao365]

To defer/optimize tax when rolling a LEAP, Paydirt and some people have suggested we can sell at a higher strike to form a spread.
For example, say if I hold Tesla LEAP Jun 2022 $1000, I can sell Jun 22 $1050 call to take premium now but it wont trigger tax event.

However, recently I learned that there is a rule called "constructive sale" from IRS, and it seems that this rule prevents the above.

Does anyone have more information about it? Thanks!

What is Constructive Sale Rule, Section 1259?

I googled a few blogs but seems all talk about stock, not options. Now I start to suspect this rule does not apply to options. Any ideas? Thanks.

 

[sleepyinCA]

I have been actively involved in the market for greater than ten years, seen some fraud and attempts to scam, documented one such attempt.

after stirring up interest here, he was unwilling to discuss publicly or privately on tmc, wanted to do such elsewhere.

the OP tried to get me onto one social media platform to discuss his strategies, then tried to get me to go onto a different platform, each of these moves raised my bs detector. I found the OP just a little lacking in info given, as a resource to better understand options he did offer one website. He ended up blocking me from Twitter, switched to a different twitter account also. He brought forth a trading plan, then failed to execute on the plan, might have left others in the lurch. He left the trade early, perhaps after stirring up some dumb money here.

screen shots easy to make on fake and demo accounts.

he blew in here from. No where, offered homage to those that came before him for all their hard work but failed to give me any specifics about this.

in private discussions his main emphasis seemed to be advocating leaving long standing safe positions and buying out of the money options DAYS Before He Sold Out and left tmc.

I don’t know that he was a fraud, but I heard him quack like a duck...
Frauds offer some truths whilst offering outsized returns.

I learned from his posts like others have. Your experience is really interesting to me. What exactly did he suggest doing in private conversations? If it were some sort of scam, I wonder what his motivation would be? Pleasure in others losing their money? I imagine that getting a couple others to buy specific options according to his trading plan would not be enough to drive up the price of the option that he can then sell...

 

[MABMAB]

I tried to learn from his posts and was willing to learn. Perhaps I am too simple. Can anyone explain what he was advocating in some systematic way that it could be applied in the future? It came across as buy out of the money leaps and sell at a profit. But not in a given set of factors that could be understood and applied. It seemed it would just take a faith based action on my part.

He would not talk via PM here.
He messaged on twitter for a while, then wanted to switch to FB.
Then he blocked me from PM. Then blocked from twitter. This after I noted he started another twitter handle.

I've done okay on my own with TSLA so my tolerance for blind faith is pretty low.

If I want to think of things in a different light, one could say he worked in the business and was doing things he was not supposed to do...but for me it was my BS detector going off.

And like I said, I've been around a while and seen scams.

 

[SCModelX]

I have been actively involved in the market for greater than ten years, seen some fraud and attempts to scam, documented one such attempt.

after stirring up interest here, he was unwilling to discuss publicly or privately on tmc, wanted to do such elsewhere.

the OP tried to get me onto one social media platform to discuss his strategies, then tried to get me to go onto a different platform, each of these moves raised my bs detector. I found the OP just a little lacking in info given, as a resource to better understand options he did offer one website. He ended up blocking me from Twitter, switched to a different twitter account also. He brought forth a trading plan, then failed to execute on the plan, might have left others in the lurch. He left the trade early, perhaps after stirring up some dumb money here.

screen shots easy to make on fake and demo accounts.

he blew in here from. No where, offered homage to those that came before him for all their hard work but failed to give me any specifics about this.

in private discussions his main emphasis seemed to be advocating leaving long standing safe positions and buying out of the money options DAYS Before He Sold Out and left tmc.

I don’t know that he was a fraud, but I heard him quack like a duck...
Frauds offer some truths whilst offering outsized returns.

I had a great experience with the OP. He helped me accelerate my TSLA gains by a ton. Super grateful that I encountered him. He asked for nothing in return. That moment passed for now, though. Way less opportunity for outsized gains.

 

[paydirt76]

the OP tried to get me onto one social media platform to discuss his strategies, then tried to get me to go onto a different platform, each of these moves raised my bs detector. I found the OP just a little lacking in info given, as a resource to better understand options he did offer one website.

MABMAB, Your attacks will be defended. As stated here and in other threads, I said:
(1) we were in a unique very narrow window of opportunity.
(2) if you want to fully understand options, it will take a long time. I used to train people to become real stock option market makers.
(3) If you wait until you fully understand options, you will miss the window of opportunity.

MABMAB, I gave you my time freely. I believe we chatted in June... When stock was around $1,000/share pre-split. I have trouble seeing how you lost money if you were bullish after that.

June 15th I started this thread. and revealed a long-term leap position.
June 17th I revealed a shorter term options play. (TSLA $990)
In between I traded some short plays but kept the short play.
July 13th when it hit an intermediate high, I said I sold the short-term play, here on TMC. (TSLA $1,495)

July 23rd when vol & stock was clobbered after earnings, I said it was a gift and that I was buying, here on TMC. (TSLA $1,510)
August 19th, I said I sold yesterday, (Aug 18th). here on TMC (TSLA $2,000)
August 20th, I said here on TMC I might buy after Labor Day, but never updated.

Late June, you told me you refused to implement in a meaningful way for yourself with stock around $1,000/share though you agreed with whatever catalysts and you thought it was a good idea. You wanted to know how the bridge worked before crossing it and fully understand options. I get it, but I don't have time for that. (I've walked the Golden Gate Bridge and it IS scary... and probably not the scariest bridge) So I blocked you so I wouldn't be tempted to convince you. Here I am convincing and trying to help and I need to stop. Sorry, I'm human.

I guess you could have bought calls the day before earnings and then sold them for a big loss in a panic the two days after earnings. Or you could have bought calls at the peak of Tesla. But I said I sold on August 18th.

All of this:
(1) for free
(2) disclosing risks of both short and long term options, be prepared to lose the money.
(3) providing exit points
(4) all the while stating that it is very hard emotionally to stick to a plan, how to cope with that with foundational principles and beliefs, but still confessing that it is hard to do.
(5) we are not robots, investing is not just a science, it is an art. I suspect you want it to be a science. I wish it were that easy too. It's not.

Again,
(1) Tesla community has made me rich and I want to give back.

I have trouble seeing why you are bitter? I don't owe anyone anything. If you weren't comfortable with whatever position you took, you could sell anytime.

My time is limited and I cannot give so freely of myself. And it appears that I am naïve as people will project negative motivations on me. Please consider removing your negative posts.