Paydirt's (TSLA) Option Investing Guide

[paydirt76]

I feel like I should build up a higher delta position and just forget about it. But every single time I look at doing so, tesla feels super expensive. And yet here we are at $1400...

You keep falling back to old beliefs... Old beliefs didn't lead you to Tesla in the first place.

You haven't answered the questions @hersey101 do you agree with the three fundamentals? Do you agree with the gigafactory model? Do you understand that realized vol (how the stock has actually moved) has far exceeded implied vol of the options market?

 

[paydirt76]

Earnings to be reported on July 22. How does that affect your strategy?

Assuming positive GAAP earnings, etc.

July 22 earnings announcement makes August even better for the inclusion play. The shortest time premium you can pay to get the result/catalyst you want, the higher the upside. Didn't Tesla release their 10-Q one day after Q1 results? The faster that gets out the door, the better.

Even if the inclusion date falls after August 21st, the regular August monthlies should capture a good portion of the run up if the inclusion date is later. Perfection is not the goal. There is some risk management here...

It wasn't stated plainly before... So when switched from Sep 1100C to Aug 1500C, the Sep 1100C had already tripled in value from purchase. For the Sep 1100C the purchase goals were two fold (1) hold until $1,500 per share is reached (2) hold until inclusion day/week. The goal was to get a quadruple or $400/contract. Caved a bit and rolled at $300/contract selling the Septembers completely, taking about $1,800,000 in profits and rolling about $1,000,000 into Aug $1,500 calls. $3,700,000 now in cash if want to do any dip buying, but will hopefully stay in cash.

As is nearly all the money in this account is profits, the $1,000,000 in Aug 1,500 calls were essentially given as a gift for free with $800,000 in cash as a kicker. This is how you grow shares. This is of course a very risky way. One could also grow shares more steadily and with less risk through Leaps given the right conditions. (Conditions still right at the moment)

 

[paydirt76]

@paydirt76: Found this thread and got enthralled reading!! Thanks a lot to you and all other sharing your experience here with the community, much appreciated!
I am not an expert by any means on Options but been trying hard to learn from the veterans here. A lot more studying to do on your theory (earmarking 4 hrs tomorrow for this).
Been thinking of capital gain taxes a lot for this year (this is post tax brokerage a/c), for the Sep 1000 Calls - thoughts on rolling these out and benefiting further from the exponential growth in TSLA?
Also wondering how to best position the DITM Jun 22 350C. Would love to have some of your thoughts on my positions. Appreciate your time/effort!
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SSQ-

1. Send a DM on Twitter to @TESLA_recap, we can better get into specifics based on your situation, your goals for this investment, and your lifetime gains. We can then chat thru Twitter DM or do a call. There is no offer, this is just to speed up conversation and get into more of your thinking and mindset.
2. IMMEDIATELY apply for higher level options trading if you don't have it. You want to be able to trade or "keep on" call spreads. May also be called "spreads" or "vertical spreads."
3. YES! Love it! You can have it any way you want. My friend would immediately roll up strikes to--at the lowest--ATM strikes for all the ITM calls. $1,600 might be highest to go with September on a bit of a YOLO/gamble. Could go higher with the further out stuff, but then breakevens and risk get higher, so heavily depends on your goals, how you're willing to think about gains, etc.

 

[paydirt76]

Oh, other good S&P inclusion news yesterday...

@Troy reported that Tesla sold more LR than SR+ in June in China. Great for margins and another help for Q2 profits. Every little bit helps!

 

[hershey101]

You keep falling back to old beliefs... Old beliefs didn't lead you to Tesla in the first place.

You haven't answered the questions @hersey101 do you agree with the three fundamentals? Do you agree with the gigafactory model? Do you understand that realized vol (how the stock has actually moved) has far exceeded implied vol of the options market?

@paydirt76
To answer your questions, here's my feeling regarding the 3 fundamentals:
1. Agreed that $TSLA is extremely streaky, though I have my doubts on whether that continues to be the case... Even with how streaky $TSLA has been, let's not forget the years of trading range bound in '18, '19, and prior to that in '14-'16... Every time $TSLA has had a large move, it's carved out a 30-50% trading range. Originally from 120-180, then 180-250, then 200-380 before finally letting loose this year. It remains to be seen whether we are in the process of defining a new long term (12+ month) trading range between 750-1500, or we are still on that up-ramp much like we were in '14 from 40-120 and then a small pullback to 90 before continuing to 180. If you ask me, my personal belief is that $TSLA is at the higher end of a longer term trading range (2+ years), not the lower end. Hence my hesitation.
2. Once again, historically, this has been the case whenever $TSLA has broken out of a trading range... Until it defines a new top, calls continue to be cheap, and once the top is in, you can be call-writers and buyers in that range... $TSLA has been, and I believe will be, an extremely volatile stock
3. There's no doubt about this. Tesla absolutely is the best and I can't see anyone catching up for the next decade.

I'm not sure what you mean by the "gigafactory model" is that a big post that I somehow missed while reading this thread? Or are you simply referring to the way in which TSLA has been expanding gigafactories globally for car/truck and eventual solar production. If you are referencing the vertical integration, yes, I agree that's the way to do things to scale and make tons of money, and it's part of the edge that $TSLA has, that, along with battery tech, and charging infrastucture/network.

I am not a believer in AP/self-driving because I've worked on that technology for 4 years as a researcher and engineer and I know it's a lot of smoke and mirrors. Tesla has the best chance IMO of succeeding, but I don't believe widescale self-driving networks as elon envisions will happen in this decade, and so, I don't factor it in in my valuations, or if I do, I give it a 1% chance of success.

Regarding your second question: Yes, in the past realized vol has been much greater than implied vol, however, this doesn't mean "calls are cheap" unless that realized vol is in the upward direction. Once again, I refer you to 2018/2019, and 2014/2016. Huge swings in stock price, but not a lot of gains. If you bought leaps at the start of those ranges, you'd have been deep under water at the end, even though volatility was higher than implied by those leaps. Unless you called the tops/bottoms and added/reduced your positions respectively. Here's again where I think we differ in our beliefs... You, and most folks on these forms, believe we are going to continue the crazy volatility in an upward direction, whereas I believe that we are much closer to the top then the bottom of the next 2+ years of trading range.

I guess it all depends on what sort of discount valuation you put on the company for execution and macro risk... I want 20%-25% discounts, which is significantly lower than the past, where the market was discounting at a 40%+ rate, and significantly higher than the average 10% discount applied to companies of the S&P 500... If the world believes execution risk is marginal, they will discount future growth at lower and lower rates, however, one mistep, and all of a sudden, those discount ratios increase and you hit a 30%-50% drop in price.

I guess I just feel more comfortable sitting on the sidelines and waiting for that to happen, then going in heavy and regretting not having the cash to invest when that happens. One thing I know I'm not factoring in correctly in this plan is future earnings and cash flows giving me more oppertunities to invest at cheaper prices (eg. I'll have way more savings in 5 years than I do today).

 

[paydirt76]

here's my feeling regarding the 3 fundamentals...
.

Fair enough. Thanks for the thoughtful response. If you disagree with the 3 fundamentals, then don't do calls. The main place we'd "re-disagree" is when S&P inclusion happens, stock will be streaky.

This valuation model, the "Gigafactory Model" was shared at your request (from page 5). This is ONLY automobiles. NO FSD.

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)
This is happening. This is not wishful thinking. We understand you don't trust Musk, but that's the past. We are seeing the buildings and lines going up. Even today, Tent 2.0 is going up in Fremont. Right. Now.

-0.9 billion GAAP Earnings in 2019
+11 lines x 1.76 billion per line = +19.36 b/year (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)?

 

[juanmedina]

No pleasure is taken from your admiring my friends privates. LOL Take action instead!
.

I was thinking about your comment. It is hard for me to commit when I don't feel I am getting a good deal specially now since we are at AH. Maybe I do this because the way I was raised; we didn't have much money, we were always savers and we paid everything cash. Maybe I am too attached to money idk. It is also easier to risk money when you have made a lot of easy money (options) and that's not been my case. I mostly had held stock since 2015 and this is my first year doing options. I believe in Tesla and that why I hold my shares for years.

Anyway I end up buying a August 21 1500 call and 11 shares. I can afford to loose the money but if I do is going to hurt a lot just because the way I am lol. I really like this thread and thanks for sharing your knowledge. Maybe if I make a lot of money with the calls I have I will put more money on the table next time.

 

[hershey101]

I was thinking about your comment. It is hard for me to commit when I don't feel I am getting a good deal specially now since we are at AH. Maybe I do this because the way I was raised; we didn't have much money, we were always savers and we paid everything cash. Maybe I am too attached to money idk. It is also easier to risk money when you have made a lot of easy money (options) and that's not been my case. I mostly had held stock since 2015 and this is my first year doing options. I believe in Tesla and that why I hold my shares for years.

Anyway I end up buying a August 21 1500 call and 11 shares. I can afford to loose the money but if I do is going to hurt a lot just because the way I am lol. I really like this thread and thanks for sharing your knowledge. Maybe if I make a lot of money with the calls I have I will put more money on the table next time.

I get this... I have the same sort of mindset at times which prevents me from making big bets on things that I'm quite confident about.

That, and the fact that the macros are overbought on every metric. I agree with @paydirt76 on the fact that a decade from now, $TSLA at $1400 will look like a steal, much like a decade ago, $TSLA at $14 (or $17) looked like it was a steal.

I also know markets can stay in a depressed situation much longer than I expect, which is why I keep buying stock instead of calls.

One thing that's helped me, and may help you, @juanmedina is to define risk, and buy time. Eg. instead of getting the $1500c for Aug at $125 and letting it go to zero, buy a Jan '21 or Jan '22 call... when it drops $125 in value (eg same risk), evaluate whether you want to hold on to it or not.

I've slowly been getting away from gambling on weekly/monthly call options and buying things 2-3 months or longer out... I make far less, but I find it helps me be more in control of my positions.

 

[hershey101]

Fair enough. Thanks for the thoughtful response. If you disagree with the 3 fundamentals, then don't do calls. The main place we'd "re-disagree" is when S&P inclusion happens, stock will be streaky.

This valuation model, the "Gigafactory Model" was shared at your request (from page 5). This is ONLY automobiles. NO FSD.

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)
This is happening. This is not wishful thinking. We understand you don't trust Musk, but that's the past. We are seeing the buildings and lines going up. Even today, Tent 2.0 is going up in Fremont. Right. Now.

-0.9 billion GAAP Earnings in 2019
+11 lines x 1.76 billion per line = +19.36 b/year (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)?

Hmm...
Here are the numbers I'm operating under:

let's say we agree on the 50% YoY production growth rate (I believe it's gonna be closer to 40% because I am conservative, but for the sake of argument).

500k in 2020, 500k * (1.5)^5 = 3.8m cars in 2025... Round it up to 4m cars to make math easy.
My assumptions:
4m cars * $40k ASP (I believe to move that kind of volume, it'll have to be lower) * 30% Gross-margins (low) = $48B in gross profits
I believe net profits will be closer to 10% as $TSLA continues to fund expansion of manufacturing... 10% net-profits = $16B in profits year.


I've modeled a 5% dilution rate, as the stock continues to rally, I believe it would be wise for Tesla to continue to do equity raises to have a larger cash buffer as this is a cash intensive business...

Now the question is, what P/E does one pay? 30x is in my opinion a safe bet... As much as we would like to give $TSLA a tech company valuation (eg. P/E of 50x, 100x, 150x), I don't think anyone will be willing to pay that kind of money for $TSLA because they are resource constrained to physically scale operations. Most folks run cars for 10 years, not swap it every year or 2 like an iPhone. And I believe all these companies (eg. $AMZN) that have crazy P/Es (eg. 150x for a $1.5T company!) are fundamentally overpriced, and I think that bubble pops over the coming years.. Everyone will subsequently be far more conservative in terms of future earnings they are willing to pay for... I think 30x might be a stretch. In either case, if we assume 30x, that gives us a value of about $480B... Let's just call it $500B... So from today's $250B, $TSLA can double in valuation if they execute perfectly next 4 years... Extending this argument with a slightly more conservative P/E of 25x, and slightly lower growth rate gives me ~$1T valuation in end of 2028 (+8 years from now).

At the end it comes down to what discount rate you want... a 20% discount rate for 4 years gives us right to $225B today, and 25% discount rate to $185B... which comes out to $880-$1100/share after factoring in dilution.

Now, if $TSLA is worth $1T in $2025, obviously these numbers are wrong, and we end up with a fair valuation of $1800....
Or, similarly, if you pay 60x P/E instead of 30x because of future growth operations in solar/battery tech, licensing oppertunities or whatever else you can think of.

 

[hershey101]

One thing to note is that all of these models are super bullish, more so then the new CEO compensation plan released in 2018 (Tesla Announces New Long-Term Performance Award for Elon Musk | Tesla, Inc.).

While I have no doubt that Elon and Tesla can fully achieve the entirety of the milestones in that compensation plan, the board designs these plans with goals that are considered ambitious to force executives to achieve highly ambitious goals.

This means that whatever "fair-value" calculations we are doing today expects Tesla to significantly outperform whatever internal goals they've set for themselves on a consistent basis, through any sort of macro environment.

If we take the full vesting of that compensation plan as base case, eg. 2028 market cap of $650B. Then the current value of $250B represents only a 10% discount. This means that the market fully expects $TSLA and Elon to unlock all of those milestones nearly 100%.

 

[juanmedina]

I get this... I have the same sort of mindset at times which prevents me from making big bets on things that I'm quite confident about.

That, and the fact that the macros are overbought on every metric. I agree with @paydirt76 on the fact that a decade from now, $TSLA at $1400 will look like a steal, much like a decade ago, $TSLA at $14 (or $17) looked like it was a steal.

I also know markets can stay in a depressed situation much longer than I expect, which is why I keep buying stock instead of calls.

One thing that's helped me, and may help you, @juanmedina is to define risk, and buy time. Eg. instead of getting the $1500c for Aug at $125 and letting it go to zero, buy a Jan '21 or Jan '22 call... when it drops $125 in value (eg same risk), evaluate whether you want to hold on to it or not.

I've slowly been getting away from gambling on weekly/monthly call options and buying things 2-3 months or longer out... I make far less, but I find it helps me be more in control of my positions.

I never thought about it that way, buying longer calls and just sell when I loose the value of the other shorter term call that I am looking at sell it. Good call. I just did feel like putting more money on the line with a longer call but that is a good way to look at it.

@paydirt76 do you think the August 21 calls will loose a lot of value after earnings because of the IV crush? What's your plan with those calls? take them to expiration?

 

[paydirt76]

4m cars * $40k ASP (I believe to move that kind of volume, it'll have to be lower) * 30% Gross-margins (low) = $48B in gross profits
I believe net profits will be closer to 10% as $TSLA continues to fund expansion of manufacturing... 10% net-profits = $16B in profits year.

I like your simple model @hershey101 . One problem tho in case you don't know, capital expenditures are not a loss. In 5 years, to attain 40% growth or whatnot, they will be needing to start 4 or 5 gigafactories (start new sites), and they might be building 6 assembly lines that year, so it would be a $9 billion use of cash. The depreciation of all the facilities is part of the COGS of the vehicle, I think (please correct me if I'm wrong).

Also when they build inventory, it's not a lose (unless they have to sell cheaper than their cost of making). They realize the profit from selling the car when it's delivered, not made. Just a couple things I have learned. Not a CPA.

 

[hershey101]

I like your simple model @hershey101 . One problem tho in case you don't know, capital expenditures are not a loss. In 5 years, to attain 40% growth or whatnot, they will be needing to start 4 or 5 gigafactories (start new sites), and they might be building 6 assembly lines that year, so it would be a $9 billion use of cash. The depreciation of all the facilities is part of the COGS of the vehicle, I think (please correct me if I'm wrong).

Also when they build inventory, it's not a lose (unless they have to sell cheaper than their cost of making). They realize the profit from selling the car when it's delivered, not made. Just a couple things I have learned. Not a CPA.

@paydirt76 Sure.... So let's talk about it in terms of Revenue multiples, or PEG ratios, or FCF multiples... Whichever one you prefer.

If we take the same model, 4m cars * 40k ASP = $160B automotive revenue. We know due to cell supply constraints $TSLA is purposefully holding back on the solar business, and I believe that will continue to be the case through 2030... Even with the historical 10%-15% battery density improvements YoY and the rapid expansion of the gigafactories, there simply isn't enough Lithium Ion battery capacity to do both solar + vehicles. So I'm not modeling any significant energy storage/solar revenue at least not till 2027 or so when gigafactories are in the dozens/hundreds, not single/tens.

You may ask: What about trucks? Okay, sure, let's factor in trucks... They take significantly more battery cells, but also produce significantly more revenue... A Semi would require about 1000 kWh battery pack to run 500mi... No one in their right mind will buy anything that doesn't go 500mi... I think the minimum capacity on the Semi is really 1000mi (12hrs * 70mph = 840mi + 15% buffer)... Long haul truckers can't wait for the 40min haults, and autonomous trucks won't be a thing till 2030-2035. Most likely tesla won't be the ones building them (they are spread way too thinly as is). In any case a truck takes 13x more batteries than a model 3, and produces only 5x revenue. That's a 2.6x loss in revenue... Unless they can cover that up in margins (doubt they'll get 60% margins on the truck), it makes more sense to starve the truck business like the solar business while being battery constrained. So I don't add anything significant on the trucking revenue because it'd come at the cost of automotive revenue.

What kind of valuation do you apply to a high-growth car company as P/S? Well $TM trades at 0.6x sales, $AMZN trades at 5.4x sales, and $AAPL (till this year's bubble) traded around 3x sales... Let's say 3x sales... That's $480B valuation... Once again we round to $500B and get the same numbers out.

 

[paydirt76]

What kind of valuation do you apply to a high-growth car company as P/S? Well $TM trades at 0.6x sales, $AMZN trades at 5.4x sales, and $AAPL (till this year's bubble) traded around 3x sales... Let's say 3x sales... That's $480B valuation... Once again we round to $500B and get the same numbers out.

Hmmm if it’s a double in 4-5 years then it’s cheap today even at all-time highs.

You can do 3x P/S but if it’s only growing at 30% after 2024 (low), they would still be growing faster than Amazon or Apple and thus deserving of a higher multiple.

 

[TheTalkingMule]

Basing TSLA's 4-5 year out valuation on automobiles is just wrong. Not because I have some alternative theory, but simply because markets change. We're edging out of the denial phase, this landscape won't exist in 2 years let alone 5.

Do we really think a Model S/3 released in 2025 would be anything special? No. The entire market will have been forced to catch up by then or die(see: The Master Plan), so competitive products will exist. Simply pumping out an amazing EV sedan will not generate the kind of margins Tesla has now and will certainly have in 2021/22. Tesla will rule the world selling the Model Y for the next 3 years, but after that.....it's anyone guess what the market looks like.

Personally I feel it's Energy that will take TSLA from a rational $300B valuation to $1T or more, but it could easily be FSD/robo. My point is, it won't be selling more and more cars. So counting how many Model 3/Y's will be sold in 2025 is pointless.

Elon has been quite clear that it's speed of innovation that counts. With the Model Y ramping, I have to think his mind is now off "cars". That part of the plan is done.

 

[hershey101]

Basing TSLA's 4-5 year out valuation on automobiles is just wrong. Not because I have some alternative theory, but simply because markets change. We're edging out of the denial phase, this landscape won't exist in 2 years let alone 5.

Do we really think a Model S/3 released in 2025 would be anything special? No. The entire market will have been forced to catch up by then or die(see: The Master Plan), so competitive products will exist. Simply pumping out an amazing EV sedan will not generate the kind of margins Tesla has now and will certainly have in 2021/22. Tesla will rule the world selling the Model Y for the next 3 years, but after that.....it's anyone guess what the market looks like.

Personally I feel it's Energy that will take TSLA from a rational $300B valuation to $1T or more, but it could easily be FSD/robo. My point is, it won't be selling more and more cars. So counting how many Model 3/Y's will be sold in 2025 is pointless.

Elon has been quite clear that it's speed of innovation that counts. With the Model Y ramping, I have to think his mind is now off "cars". That part of the plan is done.

Re: FSD, anyone that knows the tech will tell you FSD is a pipedream Elon's been pumping since 2017. It's not at all feasable in the next decade.. 2030-2035 (maybe), 2050+ almost certainly... But 2025 Ha!

Re: energy, I already outlined why it would be foolish for Tesla to expand into energy since they are battery bottlnecked through 2030. Unless some magical breakthrough in LiOn battery happens in the next 2 years. And even then, merging them into production would take 2+ years.

As to margins, Tesla will absolutely enjoy 30%+ margins for the foreseeable future. They know how to be efficient, and the competition is a joke...


@paydirt76 I bit the bullet, I bought 1600/2k spreads for $80, if I had listened to you and gotten in on Monday, they were only $50... But it's still a 5:1 payout on what is a 80% likely event so I'll take it.

I sold some 2800c against my stonk pos. because if we get to $2800 ha! I'll gladly liquidate.

In any case, I wish I had guts to go bigger, the large stock price and high preimums just make it impossible for me since any position (even a $200 call) would be 10% of my entire portfolio.

 

[TheTalkingMule]

No one really makes money selling cars today. Most of the obscene wealth in the last 150yrs human history has been gained through working in the energy sector. I think that's a good place to start.

By all means....continue your discussion of leveraged expensive options purchases made on an ATH Friday. If you don't think most 2025 revenue growth is gonna come from software or Energy, you'd better hope Tesla's selling about 20M cars by then.

 

[paydirt76]

I never thought about it that way, buying longer calls and just sell when I loose the value of the other shorter term call that I am looking at sell it. Good call. I just did feel like putting more money on the line with a longer call but that is a good way to look at it.

@paydirt76 do you think the August 21 calls will loose a lot of value after earnings because of the IV crush? What's your plan with those calls? take them to expiration?

Sorry missed this @juanmedina If TSLA announces GAAP positive earnings (which market is pricing in), it's possible that stock does not move or sells off until S&P committee announcement. But then it may make another stupid crazy move upward which should more than make up for anything.

 

[paydirt76]

In any case, I wish I had guts to go bigger, the large stock price and high preimums just make it impossible for me since any position (even a $200 call) would be 10% of my entire portfolio.

Glad to hear of your surrender. DO NOT TAKE QUICK PROFITS!

If you still have wiggle room, Dec might work in case inclusion is delayed by 3 months (if GAAP negative Q2)

 

[azaz]

@paydirt76 100k with a moderate to high appetite for risk looking at 1800 calls for Sept, how does it sound?