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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Uhh, doesn't that read as to why NHTSA requested Tesla to do the recall? So the new probe is to see if there are improvements post recall? I would assume this is just standard procedure stuff.
I was out drinking yesterday lunchtime and ended up continuing through the evening. Discovered my broker phone app doesn't work for BTC, lets you pick that option, but then flips to BTO on the confirmation screen! So ended up at my friends house on his Mac with a QWERTY keyboard (I use AZERTY), hardly able to see straight as I was so drunk, closing everything out 
Still, got it all done, although prices could have been better if I'd caught it after the FUD dump rather than before
25x -c160 -> 25x 5/24 -c170 @$8.5, net -$1
STO 100x 5/3 -p170 ($4.1)
Those 4x SMCI 5/3 -p1000's beginning to look OK, will be a nice outcome if they go OTM
Still, got it all done, although prices could have been better if I'd caught it after the FUD dump rather than before
25x -c160 -> 25x 5/24 -c170 @$8.5, net -$1
STO 100x 5/3 -p170 ($4.1)
Those 4x SMCI 5/3 -p1000's beginning to look OK, will be a nice outcome if they go OTM
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Got nervous at $172 SP mid-day Fri, but held to execute mid-afternoon at ~$169 for a small net credit on same strike rolls of CC to next week — treading water and looking for a drop to $160 in the next few weeks to clear this out and recalibrate 2024 tactics:
- 26Apr$155 —> 3May$155 (reduced #contracts)
- 26Apr$162.50 —> 3May$162.50
- 3May$165 — continue to hold
- 26Apr$145 — let this buy-write assign for a $6 gain on small #contracts; will repurchase shares and sto ATM CC on Mon/Tue
The FUD was about Autopilot crashes from years ago, plus the recall. It had a direct effect on the stock price yesterday. That is very relevant.
FSD is a different subject and after the big V12 improvement a few weeks ago its iterations do not (yet) noticeably influence the stock price.
Maybe the tesla options thread should have a Phone A Friend hotline for facilitating trade execution when, uh out of pocketI was out drinking yesterday lunchtime and ended up continuing through the evening. Discovered my broker phone app doesn't work for BTC, lets you pick that option, but then flips to BTO on the confirmation screen! So ended up a my friends house on his Mac with a QWERTY keyboard (I use AZERTY), hardly able to see straight as I was so drunk, closing everything out
Still, got it all done, although prices could have been better if I'd caught it after the FUD dump rather than before
25x -c160 -> 25x 5/24 -c170 @$8.5, net -$1
STO 100x 5/3 -p170 ($4.1)
Those 4x SMCI 5/3 -p1000's beginning to look OK, will be a nice outcome if they go OTM
If you think I'm too bullish on delivery and/or FSD, I assure you that I'm not. I'm indifferent.
Falling wedge is a very popular trade setup. What it means is we were running out of sellers faster than we were running out of buyers, evidenced by the resistance trendline (top) sloping down much more steeply than the support trendline (bottom).
Notice this week, the net buying volume was equal to the net selling volume for the week of Q4 ER. The nominal change in price was almost the same ~$28/29. That's a very strong reversal signal.
The end target for such reversal is, at the minimum, the back of the wedge at 265
Caveat: there's another less common occurrence and many theorists don't believe it exist, which is the leading diagonal. If this is a leading diagonal, then the minimum target of the move will be much lower, around 206 only. However, holding on to your short for at least another $40 betting on this rare animal is a risky proposition.
Also, if you think I'm speaking non-sense, check this chart drawn 3 weeks ago and tell me what's changed.
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Respectfully, I think your emotions are getting mixed with Tesla’s business/Elon’s politics and that’s affecting your trading decisions. I agree mostly with what you’re saying on the business side of things—but that doesn’t matter, that’s a totally different subject from trading.
What we aim to do here on this forum is transfer wealth from other market competitors to ourselves, and also to transfer risk from ourselves to others. We use what we believe is “good information” and human psychology to beat other competitors. The problem is there is a large (and profitable) industry designed to do the same to us, as well as millions of other players around the world who also want to beat us.
When many market participants are positioned bearish (like with TSLA recently), players (including market makers who know what cards other players are holding) with better information are going to use that information to their financial advantage—this has to be obvious to you by now. This is simply the money game. The game for them is not predicting SP—the game for them is squeezing the most amount of money out of traders that they can on any given day/week/month/year. Again, THEY know your hand. (Incidentally, I don’t place any long term buy or sell orders because I don’t want THEM to know my hand, I don’t want THEM to know what I’m thinking. I don’t use options or leverage).
I have played EVERY earnings for the past dozen or so and the SP has tanked pretty much every time (at least in recent memory). On Tuesday, an hour or so before market close, I was debating on whether I should trade. Like you, I was fairly certain earnings would be a miss and the stock would tank, and hell, why not, as every other earnings beat for the past several quarters have tanked the SP, why not this one, with a very high likelihood of bad earnings? But there was also the part of me that KNEW other traders were also negatively hedged, many longtime bulls such as myself were bearish, knew that the stock had already declined a fair amount, trading below the lower bollinger band for a week straight, so plenty of room to let the SP rise—this would be as good a time as any to let the stock rip and profit from the many traders who were positioned for a decline. A classic example of a “crowded trade.”
So with 3 minutes left, I bought 50 shares at $144.70. Ten minutes later the SP was at $155, so as quickly as I could I sold those 50 for $153.30. I don’t believe in holding out for more gains, if I see a profit, I take it, like Yoona’s ladder cartoon where it says take little steps to reach your goals. Don’t be greedy, don’t be stupid is my mantra—it’s the small wins that matter. Profit is always limited—but downside is basically unlimited, all the way down to ruin. Don’t ruin yourself. Have fun, make money, live to trade another day.
I think what we do here on this forum is one of the highest applications of science and philosophy the world has, and is the reason why Nobel Laureates and PhDs fail at trading: it is because this is true, hard science with immediate feedback, not some bogus BS where people hide behind their Ivy League degrees and overly-complex, esoteric charts and graphs and theories—trading is where the rubber meets the road, where the real scientists and philosophers play. You think you know something? You think you have an edge? PROVE IT. Prove it in the real world, with real world consequences of risk and wealth and disaster and bankruptcy. Your bank account will tell you all you need to know.
I absolutely believe there are first principles when it comes to trading. Principles like “Men, in the aggreggate, are fundamentally wrong, greedy, gullible and over-confident, myself included.” Men will gladly slit their own throats AND give you their money AND call you a hero so long as you’re confidently jabbering on CNBC/New York Times, with your Harvard credentials or Nobel Prize or billionaire status prominently displayed, playing on the crowds’ mass delusions and fantasies.
Keep your head up and be a scientist—no emotion, no agenda, only hypotheses and the conviction that you are always wrong—your bank account will tell you in real time if you are less wrong than others. Don’t worry about Elon—he certainly doesn’t care about you. Other market participants don't care about you, either--in fact, others want you to fail so they can win. We all just care about winning for ourselves.
Every single day I try to “think like a criminal” (heard this from an ex-Blackrock portfolio manager). How can I use my tiny, limited, inadequate perspective of the TSLA world to transfer wealth from others to myself? How can I transfer risk from myself to others? How can I be less wrong? That’s the only game I’m concerned with—not about Elon’s politics or stock pumping or Tesla’s delivery misses or anything else. For me the singular goal is how to achieve a rising bank account.
Excellent write up.
Also, I'd like to add that @Max Plaid 's notion of "We've seen in the past TSLA go on these bull runs based on nothing" is a bit misguided. Ultimately, there's one and only one reason why stocks go up, and that's because we have more buyers than sellers.
There are a lot of reasons for having more buyers than sellers, and beating earning and having a normal CEO are just 2 of those reasons. Said another way, focusing solely on the fundamentals to predict short term price movement is like peeking at the outside through a keyhole. For 2023, the recipe for the 2 crazy 100% runs was the same.
1. People shorted it too much at 100 and then again at 152. Notice how multiple personalities on Youtube including Rob Mauer was speaking of defeat. All my friends were selling 120 & 130 CCs. Tears were shed after the bounce no matter how hard I tried to talk them out of it. <- we just had 4 long months of pessimism
2. Money flowed back into the market, lifting TSLA with it <- money is flowing out but it will be back in in about 3 weeks
3. Some shorts saw no reason to stay short, covered and lifted it a bit further <- this just happened this last week
4. A bit of positive news get thrown into the mix and lifted it up even further <- this might or might not be coming. No way to tell
5. Along the way, new shorts entered because they thought it was BS
6. At some point the seemingly BS news just kept popping up every other day, and now every short felt the heat
7. The technicals flipped so strong that long traders entered
8. P&D / ER coming up and shorts started asking the question "what if it beats?" and then they ran for the door
9. Huge squeeze
So, thinking "it's running based on nothing" is a big part of the reason why it runs, cuz too many think that and bet against it, only to become fuel for the rocket. So there's a real reason for the run. You just won't see it if you're too focused on what you think is wrong with the company and Elon.
Longer term, if you're right that the company deserves a 90 SP, then the market will eventually vindicate you, but along the way, it will test you. It will break you down mentally and physically if you insist on going against the trend. It's easy to think I'll just stay short and sooner or later these stupid bulls will pay, but what if it squeezes to 300, 350? You will feel like a different person then. The worst thing is you might be right that TSLA deserves 100 right now, but then the BS bull run takes too long to end and it gets to a quarter where business starts picking up and then it seems like it will never come down again.
As for me, I try to use the chart to predict the future although people say don't do it, it's futile. They say only trade the short timeframes, don't try to play god. I don't intend to play god but only use probability and a confluence of indicators to guide my action and hope it's the right one. Ultimately, if you think in your heart of heart that TSLA will be huge 10 years from now, like I do even though I dont look at the fundamentals while trading, you shouldn't be too bearish. If your living situation permits it, it's much better to always lean bullish and see these troughs as short term setbacks. Looking at NVDA, I sweat at the possibility of FSD taking off and leaving those who are short behind so far to the point of potential bankruptcy. You can be right 9/10 times shorting, but that last one where it runs like it did in 2020 can kill you.
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Exactly, even around P&D , when everyone and their grandmothers were bearish and prepares for a fall, I cautioned here that any market maker worth his salt will make sure the SP rises . And it did pretty good by staying neutral to slight spike .
It only dropped after Reuters article about cheaper car being scrubbed .
Same situation again prior to earnings .
While we say this thread is “ Be the house”. , many here are being the hapless traders who get fleeced by the market makers . We have to think like the Market makers to make money in this market.
Let’s stay one step ahead of the market makers , understand the human psyche and make it part of your trading arsenal .
EVNow
Well-Known Member
Why would you assume as such ?
Clearly NHTSA thinks the whatever Tesla did to make sure drivers are paying attention is inadequate.
TBH I thought that for once I was being analytical rather than emotional. As a long time TSLA perma-bull, it's only recently that I've begun to be bearish, and it took a lot of negatives for that to happen
Almost every previous P&D/earnings, I've been unwaveringly bullish, bet accordingly, and got hammered when the stock did the opposite, and now the same thing happened again, except this time I positioned way in advance for the stock to crash, which it did, and earnings warranted a further drop
So maybe a good feeling for the state of the company, but indeed wrong-footed by the markets
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EVNow
Well-Known Member
But those would be too close to ATM, right ? Esp. with the drop in IV post ER, you have to write calls that are just $5 OTM ?
If by assumption you mean I am looking at the first sentence you posted as research conducted "pre recall". And then the rest talks about pre recall research and their findings.
EVNow
Well-Known Member
No ... this is the assumption. That is not what is happening - they are going to check because post recall they are still getting complaints.
I mean - you can see on YT how careless someone supervising can be when using FSD. I don't know if there is any good options here for Tesla, given they can't tell if someone is holding the wheel or not.
Well it doesn't really matter. AP is being phased out. Isn't EAP now standard? Doesn't this use FSD v11 stack? If not then eventually it'll be phased out. If Tesla decides to keep AP then just call it "supervised".
The real answer is to reduce crashes which AP generally does not because it doesn't avoid obstacles or do lane changes. It also doesn't fully stop the car of its going too fast. It's a limitation due to that it's free fancy cruise control.
EVNow
Well-Known Member
Why would you think FSD will have fewer crashes than AP. Afterall it does a lot more complicated stuff than AP. The NHTSA report does have a line on FSD ...
But I think we are getting OT. Better to continue in the AP/FSD sub-forum.
Bottomline, not every negative report is a part of a large conspiracy to deprive us of our (not so) hard earned money.
Who KNEW that this weekends casual Saturday morning reading would look like a master class in becoming and being a better trader… stocks, options, hold fold, etc..
Well, most of it for the most part. ;-)
If you're incorporating FSD technology related information into your investment thesis then I highly, highly recommend you either be driving a Tesla FSD (best), or at minimum get a test drive from a friend / Tesla that includes you being in the driver seat and driving for at least a few miles with FSD turned on.
I got a friend into my Model X the last week or so. There is magic in that first corner coming up, and then the car going around that corner, that has to be experienced. We all know that it sounds cool and stuff - but for those of us who have driven FSD we've had that moment. A mix of exhilaration, awe, terror; like the future has arrived and you've just experienced it. That was his first experience - its not really enough to alter his investment thesis, but I hope it will inform his efforts to include the info (which he is doing).
For incorporating FSD in a meaningful way into your investment thesis I really do strongly recommend (yes - Advice!) that you be driving a Tesla with FSD. Its the only meaningful way, MHO, to have insight both into how amazing it really is, and how far away it really is, from a car that drives itself.
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