boys, i need your help bigly
my former boss asked me to go back to work, so i need to unretire
it's 9-5 onsite and personal electronic devices are not allowed except during the lunch break
that means i can't trade on the dips and peaks anymore... the best would be to open contracts during the breaktime (but prems won't be the best)
and they would have to be DOTM and directionless since i can't babysit
"set it and forget it" would be too dangerous nowadays
for you all who are still in the workforce with the same dilemma, how do you fix this problem? (do a market order sunday night? that would be too risky)
help meeeeeeeeeee
TIA!
My boss asked me that as well. Kinda cool - he asked me to unretire and help out on my old project, in whatever way and under whatever restricitions I would be willing to help out. I was even going to help out a bit by transfering knowledge to the new folks on the project (they hadn't been able to hire my replacement(s) before I left and I only gave them 6 months heads up).
But then they also wanted a background check - a very open ended background check.
So I went with "no thanks". In short - you really gotta wanna
The way I handle the problem is that I don't day trade. I do most all of my trading in the first 60-90 minutes of the market (6:30 to 8:00 my time, Pacific) or around noon my time (the final hour of the trading day). I've got other stuff I want to be doing.
So I design my trades around those sorts of restrictions. One consequence is that, on occasion, I do leg my way into strangle / ICs. But virtually all of the time, I have nothing open, or only something open on one side of the share price.
With today up $15 at the moment I would consider some sort of call for this Friday expiration. I would choose that strike based on the technical stuff you're doing anyway (which I'm not doing, but I like reading what you post on the subject) as well as based on risk management stuff that I mostly focus on. In this case, shares being at such a low level, I probably come no closer than the 850 strike. The idea is that if 850 comes under pressure this week, then I'm comfortable that I can roll out to at least the 900 strike and probably a lot further. Also with this starting point I probably restrict myself to the shares / leaps that I expect I'll sell at 1000 share price and lower (I've got many of those) for balancing my account back out.
I suppose that boils down to - using all the stuff you've learned the last year or 2, and the conversations we've had around here, are there trading strategies / approaches that you've used previously that you can build a trading strategy around, where those positions don't need constant monitoring?
I do a lot of "good" trades that aren't necessarily optimal on the premiums side. My freedom to do other stuff and not day trade is too valuable to me. You just gotta be ok with "good" and not necessarily optimal.
You might also enter a fair number of trades using something simple like a limit order. A call strike you think is a good one is at $4 but you only want to enter at $5. Enter the limit order and find out at break or lunch whether you're in or not, as a for instance. Really - that situation will mean open today / close tomorrow (or later) kind of trading cycles.
I use the open on strength / close on weakness 'rules' for deciding on positions. This means that my short term positions are directional (1 side or the other open; rarely both).
Good luck and I look forward to hearing how you develop your trading strategy around these constraints.
Just thinking out loud - hasn't the market factored most/all of this in? With growth stocks being 50-80% off their highs, are we really expecting another meaningful leg down for high quality companies? If Tesla was trading in the $525-550 range, wouldn't many of us be selling kidney's to buy more stock? Is GOOGL at a PE of <15 reasonable if it touches $2000? Is it reasonable relative to my XEL or LNT stock which both trade at forward P/E's of ~22?
I'm trying to take emotion out of the equation and ask myself everyday - if I had $10,000 to buy stock right now, what would I buy? Alternatively, do I sit on the cash and wait for better prices (assuming I have the belief that there's still too much negative overhang on the markets with Covid, Russia/Ukraine, supply chain issues, inflation, etc).
Again this is all me guessing and speculating. My feeling is that the market hasn't factored most of this in. I DO agree with the premise that there is pretty limited downside from here for the really high quality businesses, such as Tesla. My limited downside though is aroudn $500, though I think <$650 is very, very unlikely. And also something I am reevaluating on a weekly basis.
To your questions - no, its not rational
. And the market can be irrational beyond your ability to remain solvent.
Here is my attempt to remove emotion from the equation:
- QT fundamentally changes the investment money dynamic of the last couple of years. And potentially the last couple of decades. For at least a short time the "Fed Put" isn't in play. We should not assume that the Fed will take action primarily motivated by what the market is doing. There are plenty of younger investors that have never experienced that. How will they react, and will that makes the down move bigger / faster?
- Building on another comment, in a really serious down turn, "everything" will be going down. At some point when margin calls are rolling in, the stuff causing the margin calls isn't worth much / enough, so the good stuff also needs to be sold to meet those calls. Back in '08/'09 that meant I was able to buy a company at 1/2 price; should have been paying 5% annual dividend (easily that quality level) but because of the market sell off, I got it for a 10% dividend (that grew quarterly!). Arguably Tesla has already experienced this, and it is always the case that a market average means that some are better and some are worse off than the average.
- Less money, bad macro, economic recession - these are all things that will contribute to PE compression. I'm in complete agreement with your observations in the first paragraph (just how low can the PE go!?!). Here is where I suggest separating the very short term share price impacts and the longer term.
- I like to remember that in the really bad market downturns, the market has been off 90%. For Tesla that will translate to a $120 share price. If we assume that Tesla will be one of the winners in that sort of crazy situation, then maybe we get $240 or even $360. I don't think that's going to happen - the Fed will step in short of that, but I like to be enough ready that I'm not wiped out; such a price won't last long if Tesla is rolling along as it is now.
As Tesla investors, our buy and hold strategy is unaffected by this noise. We know this too shall pass.
The problem is that its easy to carry that Tesla view into TSLA. When evaluating TSLA we know the long term direction. For the short term though we need to be right about direction, magnitude, and timing. And the market can be irrational longer than we can be solvent.
I try hard to separate these two views on things, and be sure that my long term view isn't the primary input into my short term decisions. I have made that mistake and been eaten for it several times. I'm getting better at separating the two. For the short term I have two buckets from which I draw most of my personal decision making
- Macro Story, and more particularly my view on the impact of that Macro Story. My own opinion (such as that interest rates are functionally irrelevant to Tesla) is irrelevant - its my opinion of how the rest of the investing world is going to react. And I've learned that the rest of the investing universe devalues Tesla as interest rates go up.
- Tesla Story, on a quarterly timing basis. I figure the last couple of weeks of the quarter are Tesla Story dominated (lead in to production) and continues to be the case through the end of the first month of the quarter (production and quarterly earnings reports). The Macro Story dominates the other half (ish) of the quarter.
- In the future I'd like to use more technical analysis as a third contributor to these decisions. So far though I consume other's TA, to the degree I use this at all.
This being the start of June I figure we've got a couple of weeks to when the Tesla STory will take over again as people position for the production report. If that has become enough of a pattern then the positioning may start now (to front run the people that will start positioning in a couple of weeks
). This is why I expect some downward move this week, but become more neutral to up for next week and rest of the month.
