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Discussion in 'TSLA Investor Discussions' started by Robert.Boston, Feb 24, 2013.
jeebus I need to learn options trading lol
... but an option can also go from $1.85 to worthless in the same amount of time. A stock may not give you the same return as an option when it goes up, but when it goes down you still have a stock (that can recover). An option will eventually expire, after a few days or after a few months/years.
In a volatile stock like Tesla you can even make good money by selling call options for a guaranteed profit with no risk (as long as they are covered by Tesla-stock you own). The only risk is missing out on a possible rally.
Yes I know. Essentially just add in the layer of timing which is super important. Anyway, Citizen-T you'd be proud of me. I just sold a few shares. It was way too tempting.
^ This makes me happy. =)
My position goes long on May 8th, right after the earnings call (expected by the Street to be on May 6th). Now, if the trend around the Q4 call was any evidence, the stock will stay high right up until the earnings call and will surely correct for a bit after (or do folks see these levels being maintained)?!
To sell (and take the short-term capital gains tax hit) or not to sell now (and potentially lose gains despite the long-term tax angle)...
What I did was I changed my tax strategy to LIFO. Forces me to play with my short term funds because I know right after options expiration the shorts are going to retake those positions. I still have my long term positions. I only kept half, not because of the earnings call but because of the unknown announcements that are coming shortly.
That's tough. Can't ask for worse timing. I constantly have a set of shares that are long term and a set that I never intend to become long term. You might want to consider scaling in and out of positions rather than single large trades. This will make you less dependent on a single date.
I know that doesn't help you right now. Unfortunately, I don't know what the right answer is, so I'll just say that one of the pieces of advice I have received over the years and found to be true enough to pin above my monitor is: "The tax man is a terrible financial advisor." The point being, don't let taxes force you to hold or sell. By all means, keep them in mind, but don't let them dicate your trades.
Excellent advice! Thanks, Citizen-T.
I also took some profits and sold shares. It was hard to pass up on realizing a rally like this. Hoping for another dip soon to re-enter!
What's your investment timeframe? What's your investment thesis?
If you've got a long-term timeframe and a thesis of continual success with S leading to X leading to Gen3, then don't sell unless there's some blow-out short-squeeze event.
If you've got a short-tem, ride the volatility thesis, then start to sell as it makes new highs, with the intent of removing risk from post conference call gyrations.
Finally, note that earning call timing has not been predictable lately. You might just get a few more days.
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Congrats, but for our purposes it didn't happen if you didn't contemporaneously post the buy.
TSLA shares were up over 5% today to reach an all-time closing high. There was no news from the company, although Morgan Stanley reiterated an overweight rating. Since the close on March 1[SUP]st[/SUP] the share price has gained more than 31%. Many who have been heeding anti-electric and anti-green pundits are heavily short the stock and have been seeing their heads handed to them. The greatest market fortunes have been made by riding radiant waves of the future and ignoring counsel from those stuck in the mud of the past.
Today, as we have read here many times in recent weeks, supposed believers in TSLA have been taking profits. That might explain the lid that was placed on the day’s early price gains. It may seem clever to time swings in a volatile stock. A very few lucky players will be successful. I suspect that most will be forced to chase the stock after it moves to significantly higher prices.
The buy-on-the-rumor-sell-on-the-news phenomenon. History shows that once a new high is established, followed by a dip, there will always come a time where TSLA will return to the high and beat it. So if you're not in a hurry to sell, I'd just hold on.
+1! What a wonderfully written statement.
@Curt, I had a %60 gain, over $18K (or, as I look at it, %20 of the cost of my Model S). To quote a famous investor, the most difficult part of investing is "letting your profits run", but, in the case of TSLA, it is so volatile, I'm betting I'll have a chance to get back in, with either a long position, or leap calls. Also, %95 of my position was in my IRA, so there is no taxable event for the gain. Of course you pay the tax when you start withdrawing the money from your IRA. If I don't get an opportunity to get back in, well, that's life, I've done fantastic with this stock, only buying 1/2 my position in July of 2012 (when I reserved my Model S), and the other 1/2 in October of 2012, a relatively short time for a nice $18 or so gain per share.
Here’s a link to a slide show from Longboard Asset Management titled “Will Tesla Shorts Get Squeezed to $200”: http://www.slideshare.net/LongboardAM/tesla-41513-18932072
I agree with the presentation, except they are underestimating the future value of TSLA, I see it over $700/share within 10 years.
and I do believe it's not going to go directly there, the stock market has ups and downs, it's tough to "fight the market", as they say, "once in a lifetime opportunitys", they come along about every 2 weeks
I couldn't resist selling 25% of my long position today near $46. Two-thirds of this quantity was "bonus shares" I bought by selling high, buying low earlier this year, so I almost consider them as "found money." I'm happy either to have realized substantial gains or to reinvest these dollars on the next dip. It seems very likely to me that we'll revisit the region south of $40 in the next month or two.
Trading with one's IRA fund makes the tax issues disappear....
Sold 3 options today for 10.00 that I paid 1.70 for. I am still holding most of my position but such a large gain on no news was very tempting. I don't see the price coming down too much before the earnings announcement. I am hoping we break 50 before the earnings announcement
This is so true. That is why I keep my shares in and trying to capture swings borrowing on margin close to the support level and then selling enough shares to return margin+interest when near the resistance level. The gains stay in stock, this way I am exposed to further gain if and when stock breaks through the resistance level.
The proceeds from this will go toward purchasing Tesla Model S. Since I plan to stay in long term, plan to get a car loan, and then pay it off selling the gained shares as needed every month. Will kill two birds with one stone: cost averaging selling + capture potential for future gain.
I started to implement this strategy relatively recently, current cycle is on, ready to sell tomorrow, hopefully into the bump caused by Shemp the market maker buying spree (see The Rolling Naked Tesla Short thread, theory by luvb2b)
Not necessarily and/or not entirely. But you already knew that. I've seen many cases where investors would have been better off owning a stock with large gains outside of their retirement plan. Your IRA will always ultimately be taxed as ordinary income while long-term gains outside of it will be taxed at 1/3 the rate. And s-t losses can't be realized for many years inside your IRA. Obviously there are many factors to consider... Often you are better off when you can take advantage of different tax rates - harder to do inside an IRA. Don't take this as saying IRAs are a bad idea...