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@paydirt76 At this point we know how many cars were sold, and can make some educated guesses about margins... The only real unknown is regulatory credits... I feel like a profit is almost certain, what are you thinking? $TSLA should be able to clench that S&P inclusion this quarter? If not, how fast does the price baloon deflate back below $1000?
OK, I gotta say that this poster has one of the most comprehensive trading plans related to TSLA that I have ever seen. He/She does not come across as some adrenaline emotional fool. I rarely come across someone that can so clearly communicate a plan, do so in advance, stick with said plan, even through some massive short term pain.
Key points I read:
Never use margin
This is a special situation now for reasons given. YES!
Catalysts to cause a paradigm change, now
Great discipline, rules, SPECIFICS
Key points I read:
Never use margin
This is a special situation now for reasons given. YES!
Catalysts to cause a paradigm change, now
Great discipline, rules, SPECIFICS
Read to the end...
Bulls are going to the "certainty" camp, and you're wondering how to adjust positions. 99% is too strong. Maybe instead of 50+% it's 75%. There are some things we don't know:
- Were there extra shutdown & startup costs to Fremont? Scrappage, wasted work? How much? $100 million or $300M?
- Are FCA credits based on FCA production/sales in the relevant quarter? If so, FCA credits could be down $175M QoQ. If not, bears will be shocked when FCA credits again are $350M.
- Reports are Tesla "only" made 10k cars in China in Q2. Expectations were higher of these higher margin vehicles.
- Now that the "launching point" pre-earnings for TSLA stock price appears to be $1,300 prior to earnings rather than $1,000, where does it peak out around inclusion day (the day when the stock is actually in the S&P 500). One used to think it would peak out at $1,500 (that's why the Sept 1100C were bought). But now that launch point is 30% higher, peak point might be 30% higher... But it doesn't HAVE to be.
- Model Y production and sales of units that may have $20,000 margin per unit. 13k more delivered in Q2 vs Q1?
If you want "safety" yet the leverage of options, farthest out expiration and at the money is best.
If you want more leverage, best is maybe 1 year options rather than 2 year options.
Calculating things in the post you quote is done by hand or spreadsheet. Picking a given month and strike and comparing against another month or another strike. It's a simple calculation, say dollars per delta (option price divided by delta of option), or dollar per day (price divided by days until expiration). You can use this for free for what a scenario might look like: Long call calculator: Purchase call options
As far as a platform. Schwab is decent, even with mobile app. Guessing TDA is OK as well.
If only one person makes $1 more because of all this writing. It will have been worth it. Sounds like someone is about to change their life even more.
I rarely come across someone that can so clearly communicate a plan, do so in advance, stick with said plan, even through some massive short term pain.
This reminds... On the close 2/19/20, lifetime profits in TSLA were $4.2M. On the close 3/24/20, lifetime profits were $2.2M. (though 3/17 was the low, just sharing readily available numbers). Patience and discipline from fundamentals and goals allowed for further purchase of calls to be made when TSLA dropped under $400. Those calls were unloaded for a large gain when stock hit $550.
I was going to buy a couple of calls today with what I made last Thursday and some money that I found but the stock is already up +$88.... I was going to get Jan21 1300c or Jan22 1500c. With the huge premarket run I am starting to feel like I am chasing the stock. Those options are going to be probably 10k more each today.
What do you think about getting Square options instead at this point?
What do you think about getting Square options instead at this point?
This... I got sq $100c earlier when it was $80 and sold way too early (20% gains) because I didn't have the decipline to stick to it. Those are up 5x right now. I made the same mistake with tsla.
In any case, I feel like even if you give TSLA a 1T market cap in 2028/2029, today's stock price represents a 16% CAGR... That's not bad when we have near zero inflation and near zero risk free rates... But there seem to be better opportunities out there.
The window of opportunity has not closed... yet. Posted a warning last week about waiting. My friend "chased" when he switched his stock & option portfolio to options-only on December 13th, 2019. The feeling is a shorter term play with maybe 25% of your Tesla money/gains. Maybe Dec'20 if you think latest inclusion happens is because Q3'20 earnings report.
Right now, opportunity in Tesla>Square, but that may be different in 3 months. Would not go "all in" or any semblance on Square even when things do change.
Edited to add @hershey101 tag as well
TheTalkingMule
Distributed Energy Enthusiast
Ok, I sold my house...now what? LEAPs? Amazing we allow this nonsense on TMC.
You know options are ultra-expensive when a $450 put contract is still $45. So you might see some profit at....1/4 today's share price. Ridiculous. Buy shares low, sit on them, sell them when they're high and you need the money.
You know options are ultra-expensive when a $450 put contract is still $45. So you might see some profit at....1/4 today's share price. Ridiculous. Buy shares low, sit on them, sell them when they're high and you need the money.
@paydirt76 Would you be able to share a more detailed valuation model? I see many folks here on the long-term thread, and other threads as well, projecting 50% YoY growth for the next decade, applying extremely large valuation multiples to 2030 revenues/earnings, and then discounting in order to justify the current share price.
By my estimates, if $TSLA is worth $750B in 2028, the current share price implies a ~13% discount, and if it's worth $1T, it represents a 16% discount.
To get to a $1T valuation, you'd need 45% YoY growth in sales for a total of ~10M vehicles in 2028, ASP of $40k, and net margins of 10% with a P/E of 25x. Most likely, by 2028, the vehicle sales won't be that high, but will be compensated for by other revenue streams (solar etc.) and a potentially higher multiple.
However, if you want 20%+ returns, then by buying $TSLA today you are implying a valuation of closer to 1.5T-2T by 2028... This seems hard to digest. Even assuming that it's founded on good research, I'd argue that between now and then, we will have many macro shocks (a Biden presidency for one), that'd result in lower valuations and better entry points for the long term.
Therefore, the only way I can justify trading $TSLA today is as a swing trade... Eg. playing the momentum.. In general for momentum plays you want to get in early on (eg. when we breached $1k) and it's probably too late for now. In either case, if the play is a momentum one, you probably want to go to Aug/Sept calls, not Jan or later to maximize returns and minimize losses...
You said:
If they believe the WS analysts, then why wouldn't you sell at the current valuations when you are getting the 2025 stock price in 2020?
On the other hand, if they are more bullish, then in some sense, all of WS has already caught on to the play, and there's no longer an oppertunity here.
By my estimates, if $TSLA is worth $750B in 2028, the current share price implies a ~13% discount, and if it's worth $1T, it represents a 16% discount.
To get to a $1T valuation, you'd need 45% YoY growth in sales for a total of ~10M vehicles in 2028, ASP of $40k, and net margins of 10% with a P/E of 25x. Most likely, by 2028, the vehicle sales won't be that high, but will be compensated for by other revenue streams (solar etc.) and a potentially higher multiple.
However, if you want 20%+ returns, then by buying $TSLA today you are implying a valuation of closer to 1.5T-2T by 2028... This seems hard to digest. Even assuming that it's founded on good research, I'd argue that between now and then, we will have many macro shocks (a Biden presidency for one), that'd result in lower valuations and better entry points for the long term.
Therefore, the only way I can justify trading $TSLA today is as a swing trade... Eg. playing the momentum.. In general for momentum plays you want to get in early on (eg. when we breached $1k) and it's probably too late for now. In either case, if the play is a momentum one, you probably want to go to Aug/Sept calls, not Jan or later to maximize returns and minimize losses...
You said:
If they believe the WS analysts, then why wouldn't you sell at the current valuations when you are getting the 2025 stock price in 2020?
On the other hand, if they are more bullish, then in some sense, all of WS has already caught on to the play, and there's no longer an oppertunity here.
if you are referring to the Jan '22 puts, that's not expensive... Think of what that represents... 10% return on your capital over the course of 18 months.... that's nothing...
Ummm I think you may be misunderstanding some of the discussion here or maybe haven’t caught up on the 5 pages of posts. We are discussing call options and LEAPS for leveraging up to the expected growth over next 2 years. If anyone wanted to hedge using PUTS, I doubt they would do this with June’22 puts.
All call options on TSLA are expensive- but maybe worth the price if you believe in the upside.
This... The crazy overnight gap ups make me reluctunt to buy.. Stock might do well but preimums are super high, they don't move a lot unless the stock rallies all day, and if we chop or drop, the preimums will burn fast.I want to see a pic of your account after today. Congrats. I couldn't commit to buy calls today and I end up doing nothing. I wasn't expecting the stock to open up so high.
@paydirt76 At what point do you consider the oppertunity gone? Is it purely post S&P500 inclusion, or at some point does the stock price simply get too frothy to keep play.
So here's where I'm struggling.
I feel quite confident that $TSLA will eeke out a profit this quarter... 85%+ probability of this happening.
Where I'm struggling is to identify the right play to capitalize on this. I could just buy shares and HODL. I feel like options prices are super expensive. One random tweet by Elon saying he's doing a capital raise, and all of a sudden, there's a bunch more liquidity in the market and we are no longer going up $100 a day... I wouldn't put it past Elon to do this, as much as he hates the shorts, he likes the long-term investors more, and these types of valuations are not good for long term investors...
I really find it difficult to believe that we can continue 10% days for more than another day or two. A macro bad day, and suddenly $TSLA drops $200 points... Now if this happens, that'd be ideal to get in on Sept calls for capitalizing on the Q2 earnings, but until it does... I just don't know what the best way to play this.
Then again, what do I know, this market is just plain stupid. $AMZN is a 1.5T company that rallied 6% today, and is 150x P/E on a growth rate that's 1/2 of Tesla....
I feel quite confident that $TSLA will eeke out a profit this quarter... 85%+ probability of this happening.
Where I'm struggling is to identify the right play to capitalize on this. I could just buy shares and HODL. I feel like options prices are super expensive. One random tweet by Elon saying he's doing a capital raise, and all of a sudden, there's a bunch more liquidity in the market and we are no longer going up $100 a day... I wouldn't put it past Elon to do this, as much as he hates the shorts, he likes the long-term investors more, and these types of valuations are not good for long term investors...
I really find it difficult to believe that we can continue 10% days for more than another day or two. A macro bad day, and suddenly $TSLA drops $200 points... Now if this happens, that'd be ideal to get in on Sept calls for capitalizing on the Q2 earnings, but until it does... I just don't know what the best way to play this.
Then again, what do I know, this market is just plain stupid. $AMZN is a 1.5T company that rallied 6% today, and is 150x P/E on a growth rate that's 1/2 of Tesla....
The truth is there is no "perfect way to play"
Very simple models are used because it is all that is needed. You sound like you "need" convincing. Learned that those who need convincing aren't coming along for the ride until it's too late. Just being real, not being a jerk. You've been warned about waiting... but all of us procrastinate when we are confused or overwhelmed. Will throw you a bone. This is a NO SPREADSHEET ZONE.
GIGAFACTORY MODEL
Tesla's overhead is too high. Without growing from 2019 levels, they would slowly die. Yet... TESLA IS RAPIDLY SCALING ITS BUSINESS AND GROWING UNITS AT 50% PER YEAR. This is incomprehensible but it happened the last 10 years and will happen for at least the next 5 years.
One assembly line in China. Phase 1 Model 3.
Cost $1.5 Billion to build. (one time cost)
200k cars/year x 44k ASP (low) x 20% gross margin (low)
= $1.76 Billion per year in gross profit (PER YEAR)
(Y and Cybertruck margins will be higher, Compact lower)
What if Tesla is adding only 11 equivalent assembly lines over the next 4 years compared to the end of 2019 production.
3 lines in China (3 ramped, Y built, and compact or Y),
4 lines in Europe (Y foundation, 3, compact [these lines are bigger, which is why 3=4]),
4 lines in the US (Fremont Y tent building, TXOK Y tent, TXOK Cybertruck, GF1 Semi)
-0.9 billion GAAP Earnings in 2019
+11 lines x 1.76 billion per line = 19.36 b (swing vs 2019)
= 18.46 billion in earnings in 2023 or 2024 (will be more, this assumes no robo, no energy, etc)...
vs 200 million shares = $92.3 / share in earnings (before taxes)
LET'S JUST THINK ABOUT 4 YEARS OUT. Let's say they accomplish this. Grow units by 50% and grow earnings by this amount. What multiple do you think Wall Street would give them? What if WS only assigns a 1 PEG ratio? and only a 40% growth rate for the next 5 years (despite then having a roadmap for another 4-5 years of 50% growth)?
I want to see a pic of your account after today
No pleasure is taken from your admiring my friends privates. LOL Take action instead!
In the pics, the plus move on a given options line is the change in that option on the day, not the gain to the holder that day.
Today is still considered a victory though they cracked and ended up taking profits while rolling up to higher strikes. What can be said? We’re all human.
They still made more than deltas dictate (indicating IVs went up again). They are at 8,800 deltas. Switching from Sept to Aug greatly increased theta (daily options decay/bleed from -$8,600 friday to -$20,100 today). (Google options theta to understand better).
Options now down to 38% dollar wise of net worth, synthetic deltas back down to 106% of net worth (synthetic deltas = deltas times share price = 106% of net worth). Both of these numbers got much higher during the day.
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