This drop is amazing. The long term thesis, at least for me, remains intact. We're getting down to prices where the financials will start drawing buyers, so the resistance to going lower (spring being wound) is getting higher and higher.. This has happened before, just before the breakout from the 280-380 trading range. We'd been in that for a few years. Then just before the break through 400 the shares pull all the way back to the bottom of the previous trading range of 180-280. There were some fortunes made by people buying far OTM options for very small amounts at that level. A few months later and we were through 400, on the way to 1000 (all those are pre-split share prices).
As a result - the primary risk I continue to identify, for myself at least, isn't an even lower and lower share price. The risk I am primarily guarding against is a big / fast reaction the other way and running over covered calls. As a result I have no cc open right now and am mostly not opening. Maybe on a big up day, for a 1-3 DTE position - that sort of thing. For me this strong move into close reinforces just how fast up we can go, and how easily I could have cc get overrun.
The primary question I've got tumbling right now - I expect Monday to be flat to up (uptick rule). If Tuesday becomes another leg down, is it time to turn most of the remaining cash into more leaps? Are we getting low enough to buy speculative leaps instead of share replacements?!?
It looks like IV is increasing on the June '24 2200 strike leaps, enough so that the last big drop still has these trading around $50. Still too high for me to go looking for a high leverage long duration play, but I'm continuing to monitor.
But even more share replacement leaps is looking more and more desirable to me, despite feeling like I'm going to run out of cash.
It's either this.....or the end of the world IMO.
We talk here like a select group of retail investors/traders know where this ship is going and everyone else is oblivious. There are plenty of banks and hedge funds in full agreement with our revenue and earnings projections. They may not buy into what we feel 2025+ has in store, but they somewhat believe $25-35+ in EPS is coming real soon. They simply don't want to go out on that limb until they have to.
Did anyone else get the feeling that TSLA literally dictated all market action today? I didn't look at much other than TSLA all day, but AH it became apparent we should have had a nice fat green day today across the board. The move in Tesla was so strong it played a huge role in dragging down QQQ and that set the pace for the whole market. Asia and Europe were super-green heading into the open, and then the clearly orchestrated 5/20 TSLA plan dragged US markets down.
As a TMCer it's easy to fall into this trap of Tesla being the center of the universe, but I think today it was. I add this comment because I think it ties into these
@adiggs comments above. We're at another one of those
-or-get-off-the-pot moments for TSLA. We've beaten the "absurdly low PE" argument to death, but it's true. We can't stay in this range unless an end of the world recession is imminent, and I highly doubt one is.
And we can't slowly ratchet up from here all summer, it'll be way too easy for retail to eat up all the premiums selling BPS. Either the entire market(and actual economy) must implode, or we move back to a 150+ PE that's still not even really appropriate. In July that equates to $1,405. Should the shorts hold us down through 2Q somehow, that 150 PE becomes $1,700+ in October.
Again, we act like nobody knows these things.....I would wager they do. We just have the problem of also caring.
(and being absurdly concentrated in one security with which we financially live or die)
PS: For the above reasons I've been buying Nov18 $1200c, getting me beyond 3Q earnings. Now that I've sold nearly all shares and am purely in LEAPs/calls/cash-I-need, I don't even really want to buy more straight calls. So now I'm selling weekly BPS and using the proceeds to buy things like June 2024 $1500/$1600 call spreads. Grabbed some for $9 today, and could've gotten them for $8 at the lows. That's $900 for a nearly guaranteed $10k two years from now IMO.
Not advice.
