Wiki Selling TSLA Options - Be the House

[adiggs]

Reading into the lack of news and expectations that SMCI earnings aren't going to be good, don't know what to do other than roll until I can't ???

not-advice
One idea for DITM spreads that I've been using effectively this year is a flip roll. Round numbers - you can flip roll an ITM call spread to an equally ITM put spread with the same expiration, but one strike worse, for a net credit.

I don't know how far ITM the spread is that you're talking about, but if you've got a put spread that you're really hating, what call spread can you roll that into (it'll be a bit further ITM to start, given you restrict yourself to rolling for a net credit). Do you like that position better?

One way I've used this is to flip roll half of a position. That leaves me in an overall position where a move in neither direction keeps my high % loss equally high. But a definitive move in either direction will cure one half of the overall position. Of course the other side will be a bit deeper into max loss territory.

But mostly I have been, in effect, swing trading these spreads. Each time I give up $5 on the strike, but as long as I've gotten more ahead than that first, then the overall result has been getting the spread closer and closer to the share price.

Hopefully this makes sense - all you've got to do is get the direction right as you swing trade the spreads. At least for me its a lot easier to try and pull this off when I've started with spreads that are at $25 on a $30 wide spread (there's not that much more loss to be found at that point)


Beyond the flip roll you get other permutations - a split roll where you turn 1 bad spread into 4 bad spreads (or whatever number you like). They'll still be bad spreads, but you can get them a whole lot closer to the money and resolution. This usually means increasing your total risk and potential loss. Split flip (more spreads, and of the other kind).


Ideas that have helped me a lot, but are themselves very much a source of risk.

At the end of the day, when we choose to roll a position, what we're really doing is realizing the loss on a bad position, while pairing that up with a position that we are unlikely to ever open directly, and looking for a directional move to make back from the 2nd position the loss that we realized on the first position. By rolling for a credit we maintain positive CASH FLOW, not earnings.

 

[adiggs]

not-advice
I hope I can get this articulated clearly - I am increasingly of the view that in the short to medium term (I take medium out to 2 years / end of option chain) the market is at the start of a fundamental reassessment of the correct valuation of TSLA and Tesla. My long term view (10+ years) of the success of the company is unchanged.

However for the first time since 2013 I find myself needing to re-assess how I see the valuation in 2030 and beyond. My own valuation has never relied on robotaxi revenue (I view robotaxi as sufficiently far out, and the business model sufficiently untested, that I treat robotaxi as an effectively free option as a TSLA owner). My own valuation has very much relied on the idea that Tesla can become that 20M units/year car company. In this next earnings call the company will need to address the Model 2 / mass market car and 2030 unit volume, change to company strategy, change to company business model. If the company is shifting gears from being a mass market car company, to a company that is building out their own robotaxi fleet by 2030, then I'll need to re-assess based on what they have to say about that and how believable I think that is. Heh - I'm reassessing regardless of what they have to say.

The key element here is that I need to reassess. I don't know enough to arrive at a conclusion yet, but here's a start of stuff I'm considering.

Analyst Community projections and prognostications

The aggregate view of 2024 EPS is 2.67, average over 40+ analysts.

Magnificent 7 PE multiples

3 numbers I find relevant. Mag 7 PE is 38, S&P 500 is 24, and S&P 500 equal weight is 21.

Lastly - analysts are estimating revenue of 103B this year, and 120B next year. 16% revenue growth is nothing to sneeze at, but how much is that worth? This being a capital intense business, earnings are really sensitive to capital utilization. I understand very well that 16% revenue growth can easily mean dramatically higher earnings growth, and I really hope that is exactly how it translates! It's also something that needs to be delivered.

Again simplistic thumb to the wind... 2.50 earnings at a 40 PE is $100 share price; 3.00 earnings at a 40 PE is $120.

I'm pretty sure that 16% revenue growth is worth more than a 20 PE - 2.50 earnings at a 20 PE is $50 share price; 3.00 earnings at a 20 PE is a $60 share price. I'm not confident that its worth significantly more than that 40 PE.

This is not a particularly robust argument for what a fair share price should be for the company, but it is a pointer to the idea that maybe the current value of the company needs to be reassessed. Its a pretty reasonable justification for the share price going under $100, and why even the $147 closing price this week is still much too high.

Another related bit - Ford PE is 11ish and GM PE is 5.5ish. Neither goes above 20 on the quickie sources I found. Those analyst earnings estimates at 10 PE is a $25-30 share price. I am definitely, DEFINITELY, buying the dip at $25/share!


How might we get there? I am really conflicted about whether the share price will be "sticky" or go into free fall. The sticky argument is that there is enough interest and goodwill in the company, built up over years and years, that significant volume of buyers will keep buying the dip all the way down, thereby reducing just how fast the share price can move to reconnect the share price to some of the basic financials.

The free fall argument is that enough people need to reevaluate the apparent change in strategy and the corresponding business that might arise under the new strategy, and see where that takes them, that buyers dry up and the share price needs to go down a lot, fast, to start finding meaningful buyers again.

If we do enter that sort of revaluation of the company then I fully expect the share price to overshoot - to overcorrect. It seems to be the way of things, and I think is a natural way to progress and find that equilibrium.

 

[Max Plaid]

I wasn't so fortunate. Not only did I forego closing yesterday, today I couldn't trade, was driving, when I got to my appointment, SMCI was already down to 760 ! I had to call in and have an options specialist manage the rolls to next week ... and the SP continues to dive. Now have +p685/-p785 rolled at small credit down and out and +p730/-p830 rolled for debit off-setting the initial credit also down and out to 4/26. They are each beet red. Reading into the lack of news and expectations that SMCI earnings aren't going to be good, don't know what to do other than roll until I can't ???

Be careful folks, I took the initial sold sides at .04 delta ... this drop wasn't expected.

EDIT: I STC half of the TSLA option positions I have open: 5 Jan '25 +p180, they are synthetic green, still a loss but much better selling these now than what I could have got at SP=170 when I BTC the paired Jan '25 -p240. Also BTC 5 4/26 -p130/+p140. Was going to hold these through Mon/Tuesday, decided better to take profit on half now while they are green.

Had to roll the 4/26 -p930 as it was zero extrinsic, 5/3, being earnings week has higher IV so went to -p1000

The sell-off was on fears of poor earnings, but that’s just speculation, might be great for all we know and the stock will shoot back up, I’m ok to take that bet

But again, these two -p1000 are written against Jan +p800, the other two -p1000 against Jan +p1000 and I took +$100 premium on those up front

So I have ample time to adapt, or if I get bored with it, just close out the whole lot with very small loss

The key is SMCI IV staying high, if it flat-lines like NVDA did then rolling for profit or strike improvement becomes difficult

 

[adiggs]

The wildcard that I have lost some cycles to, is whether the investor community is about to experience a ChatGPT moment regarding FSD technology development. In this situation AI type multiples and hype are suddenly the driving story about the company, and as we've seen with NVIDIA, its hard to find a price that is too high. In Tesla's case it could be even better than most anybody else has experienced as Tesla's technology will be an actual instantiation of what's possible, instead of a bunch more potential that is largely unrealized.

While I do think about that ChatGPT moment, and lacking information from the earnings call and later this 8/8 event, I view this as a Nothingburger, at least for 2024. My rationale is that - yes - FSD is amazing. I use it daily, I have used it daily for years (I'm taking the over on me having driven 10k miles on autopilot), and I think that the technology is even better than most anybody realizes.

However a ChatGPT moment needs a lot of people to personally experience the technology, not read about somebody else's experience. There are maybe 100k people in the US with direct personal experience? It's not 1M. Are there meaningful numbers of people anywhere else in the world?

I took an investing buddy out today in Hugo (our Model X) and got him into the driver's seat and a dozen miles of FSD driving. That very first corner where FSD takes the car around the corner - that's an experience I remember for myself. Do you remember that moment for yourself? THAT is a ChatGPT moment and he had that today. So now we've got 100,001 people that have had the opportunity for that.

So yes - it COULD happen. My own decision is that I don't yet know enough, I expect the company to talk about this a lot at the earnings call, and I have a heavy bias towards "it doesn't matter" for 2024 and probably 2025 (to the short/medium term share price and company valuation).

That means I give ~zero revenue to robotaxi for this year and next, and consider 2026 for anything more than Waymo / Cruise scale deployment and revenue to be aggressive.


Outside of teh ChatGPT type of moment, the sorts of things that I am looking for that tells me we're approaching technology that can support robotaxi.... are enough of us using FSD, and we've been using it long enough, that we're no longer marveling over how amazing it is?

Can we see the changes in behavior from update to update? I most defnitely can.

I'll consider robotaxi technology to be getting close when we've got release after release that is improving the technology, but we the daily users can't tell what those differences and improvements are. That's the march of 9s hard at work, digging deeper and deeper into corner cases and solving them. In this view of things we CAN'T see that this year. If the very next release I get exhibits this behavior (seems to work the same as the current release; it better be better!), and I see another release each month for the rest of the year with similarly outstanding and unchanging behavior, and that is our shared experience in this forum, then the very soonest this criteria can be met is next year.

Is 6-9 months of constant improvement that most people never see or experience themselves enough for society to be ready for driverless cars roaming the streets? I don't think so, but that's an opinion. I suppose that could be enough for a ChatGPT type of moment though (holy heck - its really happening, and really real!!! kind of thing).


Bottom line for me - I'll continue monitoring. I do recommend to any and all investors that they need to own and drive a Tesla, because the owner experience is (MHO) an important part of the investing rationale. And until I hear something from the company that convinces me otherwise, my portfolio won't reflect a robotaxi driven ChatGPT moment as a possibility for 2024. If anything I expect this to be a buy-the-rumor (omg - how good could fsd be!?!!), sell-the-news (they're just saying what they keep saying every year; NEXT year is the one!) thing, where the company starts talking and possibilities get resolved, and its clearly another Nothingburger, just like it has been for years.

(I just realized this is probably more appropriate in the FSD Discussion thread.. Sigh)

 

[Max Plaid]

The wildcard that I have lost some cycles to, is whether the investor community is about to experience a ChatGPT moment regarding FSD technology development. In this situation AI type multiples and hype are suddenly the driving story about the company, and as we've seen with NVIDIA, its hard to find a price that is too high. In Tesla's case it could be even better than most anybody else has experienced as Tesla's technology will be an actual instantiation of what's possible, instead of a bunch more potential that is largely unrealized.

While I do think about that ChatGPT moment, and lacking information from the earnings call and later this 8/8 event, I view this as a Nothingburger, at least for 2024. My rationale is that - yes - FSD is amazing. I use it daily, I have used it daily for years (I'm taking the over on me having driven 10k miles on autopilot), and I think that the technology is even better than most anybody realizes.

However a ChatGPT moment needs a lot of people to personally experience the technology, not read about somebody else's experience. There are maybe 100k people in the US with direct personal experience? It's not 1M. Are there meaningful numbers of people anywhere else in the world?

I took an investing buddy out today in Hugo (our Model X) and got him into the driver's seat and a dozen miles of FSD driving. That very first corner where FSD takes the car around the corner - that's an experience I remember for myself. Do you remember that moment for yourself? THAT is a ChatGPT moment and he had that today. So now we've got 100,001 people that have had the opportunity for that.

So yes - it COULD happen. My own decision is that I don't yet know enough, I expect the company to talk about this a lot at the earnings call, and I have a heavy bias towards "it doesn't matter" for 2024 and probably 2025 (to the short/medium term share price and company valuation).

That means I give ~zero revenue to robotaxi for this year and next, and consider 2026 for anything more than Waymo / Cruise scale deployment and revenue to be aggressive.


Outside of teh ChatGPT type of moment, the sorts of things that I am looking for that tells me we're approaching technology that can support robotaxi.... are enough of us using FSD, and we've been using it long enough, that we're no longer marveling over how amazing it is?

Can we see the changes in behavior from update to update? I most defnitely can.

I'll consider robotaxi technology to be getting close when we've got release after release that is improving the technology, but we the daily users can't tell what those differences and improvements are. That's the march of 9s hard at work, digging deeper and deeper into corner cases and solving them. In this view of things we CAN'T see that this year. If the very next release I get exhibits this behavior (seems to work the same as the current release; it better be better!), and I see another release each month for the rest of the year with similarly outstanding and unchanging behavior, and that is our shared experience in this forum, then the very soonest this criteria can be met is next year.

Is 6-9 months of constant improvement that most people never see or experience themselves enough for society to be ready for driverless cars roaming the streets? I don't think so, but that's an opinion. I suppose that could be enough for a ChatGPT type of moment though (holy heck - its really happening, and really real!!! kind of thing).


Bottom line for me - I'll continue monitoring. I do recommend to any and all investors that they need to own and drive a Tesla, because the owner experience is (MHO) an important part of the investing rationale. And until I hear something from the company that convinces me otherwise, my portfolio won't reflect a robotaxi driven ChatGPT moment as a possibility for 2024. If anything I expect this to be a buy-the-rumor (omg - how good could fsd be!?!!), sell-the-news (they're just saying what they keep saying every year; NEXT year is the one!) thing, where the company starts talking and possibilities get resolved, and its clearly another Nothingburger, just like it has been for years.

(I just realized this is probably more appropriate in the FSD Discussion thread.. Sigh)

No, I think this is appropriate here as it's directly relevant to the valuation of TSLA

I do think FSD will become a thing, but I'm sceptical for it helping the stock price this year. Nevertheless on the medium to long term it could be a huge catalyst 2025 onwards

So for that, as I said already, sorry for repeating, I will hold onto my +c200 LEAPS and roll them forwards. Continue to use them as long legs in calendar diagonals, and keep them alive as "proxy shares"

I still don't rule-out buying a pile of stock, I'd want "perfect storm" for that, so a dump to $100, offload my +p$150's at the right moment, then write 100x CSP puts -p90's and let them assign

That would be OK, but will see how it plays-out, need to get through next week first

 

[Blue horseshoe]

No, I think this is appropriate here as it's directly relevant to the valuation of TSLA

I do think FSD will become a thing, but I'm sceptical for it helping the stock price this year. Nevertheless on the medium to long term it could be a huge catalyst 2025 onwards

So for that, as I said already, sorry for repeating, I will hold onto my +c200 LEAPS and roll them forwards. Continue to use them as long legs in calendar diagonals, and keep them alive as "proxy shares"

I still don't rule-out buying a pile of stock, I'd want "perfect storm" for that, so a dump to $100, offload my +p$150's at the right moment, then write 100x CSP puts -p90's and let them assign

That would be OK, but will see how it plays-out, need to get through next week first

The possibility for a catalyst to the upside exists that, if fsd improves enough, someone could cut a deal with Tesla. In the last b2g podcast with Brad gerstner and Bill gurley they discuss the fsd possibilities (approx starts at 42 min mark)

Specifically if someone like Uber forms a partnership to provide Tesla fsd rides I think it would be a bigger catalyst than when the hertz deal was announced. Uber already has the platform for rideshare and it would address the capital cost of a rapidly expanding robotaxi fleet by allowing individuals and businesses to take it on in exchange for a share of the profits.

To bring it back to option selling I get the same feeling that I did in 2021. Back then I was selling 20% otm cc every week with one month expirations for $20k in premiums. The sentiment then was there were no huge catalysts that should result in a large and sudden upswing and up until November I was correct. Then the hertz deal got announced and my sold calls were absolutely decimated. Although I was positioned net long in my portfolio as soon as the markets opened post hertz deal there was a spike in premiums and for a second I thought TDameritrade was going to liquidate my positions.
I made the decision then to cut bait and close all sold call positions for a seven figure loss which was overshadowed by the gains in all of my long positions.

What I should have done is allow some of the calls to be assigned (20%), roll 60% out to buy time, and focus on the remaining 20%. Using the strategies learned in this thread I could manage the smaller portion of underwater calls until I can close them out and then rinse and repeat

 

[Patrick66]

Well, I wasn't prepared for NVDA <$780. I can ride it out until earnings, but it sucks for now.

For TSLA... the company really needs to work on messaging. Elon's compensation plan is one gross example of the company being out of sync on that message; it makes their market for selling cars and services that much smaller due to more people being offended by Musk.

The messaging TODAY should be about how good their driver assistance system is, and how much value it provides at $100/month. I am traveling for a few weeks, and I rented a RAV4. It is amazing just how bad a car it is, and I would have comfortably spent an extra $100 for FSD on a Tesla rental... if renting a Tesla was viable here. (I am going to some remote spots on Victoria Island, BC, that will put me over 400 miles between any form of charger.) Tesla has such an easy message for why people should go for their solutions, but they squander it.

So back to the technicals, and TSLA not having any buyers: they aren't taking meaningful action to address top-line growth, they have "done about all they can" on gross margins, and overhead is increasing. You fix all three by focusing on messaging IMO.

 

[elasalle]

India trip postponed
Price cuts

Weekend just beginning and two headwinds already

 

[juanmedina]

India trip postponed
Price cuts

Weekend just beginning and two headwinds already

How much worse can it get ?

 

[InTheMiddle]

India trip postponed
Price cuts

Weekend just beginning and two headwinds already

Alternative perspective - those exact same two items are, IMHO, among the strongest tailwinds readily available. Time to consider…

 

[EVNow]

Tesla have not pivoted away from their mission statement and their master plans..period.

This is your speculation. Nothing to back it up. All pointers are in the other direction. You have to disbelieve all the reporting and many of Elon’s recent tweets to cling on to that statement.

 

[EVNow]

India trip postponed
Price cuts

Weekend just beginning and two headwinds already

Going to India in the middle of the elections made little sense.

 

[Singuy]

This is your speculation. Nothing to back it up. All pointers are in the other direction. You have to disbelieve all the reporting and many of Elon’s recent tweets to cling on to that statement.

Right, we will see this ER. Leagally they have to disclose any changes in guidance. So far I haven't seen any filing suggest any changes beside Elon being bullish about fsd since the beginning of time.

 

[EVNow]

I'll consider robotaxi technology to be getting close when we've got release after release that is improving the technology, but we the daily users can't tell what those differences and improvements are. That's the march of 9s hard at work, digging deeper and deeper into corner cases and solving them. In this view of things we CAN'T see that this year. If the very next release I get exhibits this behavior (seems to work the same as the current release; it better be better!), and I see another release each month for the rest of the year with similarly outstanding and unchanging behavior, and that is our shared experience in this forum, then the very soonest this criteria can be met is next year.

Two important points about this criteria.

First, there are a lot of basic features FSD still doesn’t have. They need to introduce those. How long will it take them to recognize school zones ? How about hand gestures ? We need to see these introduced rapidly and mature quickly. Otherwise 12 is a repeat of 10 and 11 I.e. a local maxima reached quickly with little improvement over the releases.

We absolutely need Tesla to start putting out hard numbers. As investors we need to understand the progress with numbers rather than by reading tea leafs.

BTW, here is something interesting in comparison to ChatGPT. If ChatGPT produces 9 human looking output out of 10, everyone is amazed. If FSD performs like a human in 9 out of 10 turns, everyone talks about the 1 failure where it hit the curb.

 

[elasalle]

Two important points about this criteria.

First, there are a lot of basic features FSD still doesn’t have. They need to introduce those. How long will it take them to recognize school zones ? How about hand gestures ? We need to see these introduced rapidly and mature quickly. Otherwise 12 is a repeat of 10 and 11 I.e. a local maxima reached quickly with little improvement over the releases.

We absolutely need Tesla to start putting out hard numbers. As investors we need to understand the progress with numbers rather than by reading tea leafs.

BTW, here is something interesting in comparison to ChatGPT. If ChatGPT produces 9 human looking output out of 10, everyone is amazed. If FSD performs like a human in 9 out of 10 turns, everyone talks about the 1 failure where it hit the curb.

simple question - Which of these features does Waymo L4 have?

To start RT network, can we not assume FSD must be at par or if not slightly better than waymo/cruise? School zones etc in a geofenced solution could be heuristic based (on top of the current NN)

The specs is full of lot of things, but as far as implementation we just have waymo and Cruise as the current gold standard. cheers!!

 

[ZsoZso]

Can anyone suggest a source where I could access intraday (e.g. 5 minutes interval) stock and options prices for the past year or so?

Free is best, but a reasonable low cost source would interest me as well.

Thanks in advance!

 

[Yoona]

good morning, amigos

i know this has been discussed to death and i wish i paid more attention, but can someone PLEASE give a cheat sheet on LEAPS? i want to try it out for a trial PMCC: i am thinking SMCI ATM CC $44(!) credit

i am absolutely a dummy on LEAPS

for ex:

• best time to buy - when stock is on strong momentum up? or down?
• how to determine LEAPS strike and expiration?
• how does rolling LEAPS work? roll when stock goes down or up? is it credit or debit?
• i have to buy LEAPS closest to 1 delta (to mimic stock), true?
• how does profit-taking work?
• this is for long-term investment, at least 7 yrs

TIA!

 

[StarFoxisDown!]

No, I think this is appropriate here as it's directly relevant to the valuation of TSLA

I do think FSD will become a thing, but I'm sceptical for it helping the stock price this year. Nevertheless on the medium to long term it could be a huge catalyst 2025 onwards

So for that, as I said already, sorry for repeating, I will hold onto my +c200 LEAPS and roll them forwards. Continue to use them as long legs in calendar diagonals, and keep them alive as "proxy shares"

I still don't rule-out buying a pile of stock, I'd want "perfect storm" for that, so a dump to $100, offload my +p$150's at the right moment, then write 100x CSP puts -p90's and let them assign

That would be OK, but will see how it plays-out, need to get through next week first

Using a similar strategy. I have a certain allotment of c170-200 2026 LEAPS that I will keep and roll forward probably annually for the new few years while I slowly accumulate at similar strike prices and lower prices since I'm cash flow positive on significant basis because I will continue to work at the company I'm at for the foreseeable future (great work live balance). The cash needed to roll the LEAPS a year at a time is small % of my FCF from my job on a annual basis.

The LEAPS I own act as proxy shares if the TSLA has it's Chatgp moment over the couple of years where the stock goes a a Nvidia type run.

Most of the share accumulation I'll be doing over the next couple of years is to lower the price I need TSLA to be at to do my "farewell into cozy retirement" and thus I can then start to sell CC's at the lower strike prices to get even more income.

I actually wouldn't mind if TSLA just stayed range bound of like 150-300 for the next 3-4 years. Would allow me to accumulate enough shares to where I could apply a options strategy to replace my income and my wife's pretty safely, with the obvious risk always being the stock goes a 2-3X run in single years time where my CC's will be exercised. If that scenario ends up happening, I'll happily part with the shares and start to enjoy my free time

 

[thenewguy1979]

Cut price before PD. Increase after PD. Now cut again before ER…….

Getting too funny now with the prices

 

[dl003]

Can anyone suggest a source where I could access intraday (e.g. 5 minutes interval) stock and options prices for the past year or so?

Free is best, but a reasonable low cost source would interest me as well.

Thanks in advance!

you can get an IBKR account. they have option price chart for each individual option.