Short-Term TSLA Price Movements - 2013

[sleepyhead]

I have a $160/$165 Bull call spread that is expiring today and of course TSLA is hovering right around $165. I was trying to figure out the best way to close out this position. Here is some info:

TSLA is at $164.80, so the intrinsic value of my spread is $4.80.
I am trying to close it out with a $4.50 limit order, but it is not close to being filled.
I can get about $4.20, but that doesn't make much sense since the intrinsic value is much higher and I would be taking a 15% haircut.

If I knew that TSLA would close above $165, I would just hold on to both options and let them both get filled. But if TSLA closes at $164.99 then I will get assigned shares that I don't want. Too much risk.

I am going to wait till last minute, but I am afraid that there will be a sell-off at the end of the day (pretty sure this will happen).

I guess there is really nothing I can do but wait till last minute to let all of the time value bleed out. I guess I will risk it and use it as a learning experience.

Any suggestions?

 

[Mario Kadastik]

I'd contemplate trailing orders for closing. At worst you'd take a minor extra loss by trailing sums plus bracket. At best you'll get a small market run and extend the profit above 5 / contract.

This however is a good idea if there IS movement, which doesn't look too good right now...

 

[TSLAopt]

I have a $160/$165 Bull call spread that is expiring today and of course TSLA is hovering right around $165. I was trying to figure out the best way to close out this position. Here is some info:

TSLA is at $164.80, so the intrinsic value of my spread is $4.80.
I am trying to close it out with a $4.50 limit order, but it is not close to being filled.
I can get about $4.20, but that doesn't make much sense since the intrinsic value is much higher and I would be taking a 15% haircut.....

Any suggestions?

Sorry sleepy.
if you were with the broker that doesn't sell your option orders to "internalizers" but sent your orders directly to the options exchanges you would have been filled by now I bet ;-)
if you submitted it as a spread order it'd go to the complex order book of the exchanges first and if it didnt execute right away then with 20 minutes or so to the close I'm sure some market maker would see your order on the exchange as an arbitrage opportunity and take the other side.
however, unless you are at this broker, then your order is being sold to an internalizer who gets to manipulate your spread in any number of ways until they can make money off of it. (This assumes the TSLA stock is around where it is now, 164.50 or above near the close)

 

[SuryaDham]

If I knew that TSLA would close above $165, I would just hold on to both options and let them both get filled. But if TSLA closes at $164.99 then I will get assigned shares that I don't want. Too much risk.

Any suggestions?

Is it just about the risk of sitting on the shares over the weekend? If yes, then I would wait until 4PM and if the stock closes below 165 then I would just sell the TSLA shares short (either 1 Second before market close or in after market). You will be assigned the same amount of shares over the weekend and monday you will be net zero in shares.

 

[TSLAopt]

Sorry sleepy.
if you were with the broker that doesn't sell your option orders to "internalizers" but sent your orders directly to the options exchanges you would have been filled by now I bet ;-)
if you submitted it as a spread order it'd go to the complex order book of the exchanges first and if it didnt execute right away then with 20 minutes or so to the close I'm sure some market maker would see your order on the exchange as an arbitrage opportunity and take the other side.
however, unless you are at this broker, then your order is being sold to an internalizer who gets to manipulate your spread in any number of ways until they can make money off of it. (This assumes the TSLA stock is around where it is now, 164.50 or above near the close)

Someones bidding at 4.30...you should be able to take that now if you'd like even on your existing brokerage platform...actually someone was just filled at 4.40, now 4.50, hopefully that was you

 

[sleepyhead]

Is it just about the risk of sitting on the shares over the weekend? If yes, then I would wait until 4PM and if the stock closes below 165 then I would just sell the TSLA shares short (either 1 Second before market close or in after market). You will be assigned the same amount of shares over the weekend and monday you will be net zero in shares.

That is a great solution, but I don't think that I have enough cash (or margin for that matter) in my account to sell shares short.

In the end, there is no good solution for something like this. My $4.50 limit order finally got struck when TSLA hit ~$165 at about 3:04 EST. I took a 10% haircut, but I think it is worth it because I got 90% of max value and I don't have to risk holding on to this spread into the last trading hour. I think stocks will go down from here as people lock in profits after a great weak and prior to the Bernanke show next week.

To sum things up:

I bought the $160 weekly call on Monday at $3.63 when TSLA hit rock bottom (I timed this perfectly, because I realized that TSLA hit $158.50 for a third time that day and couldn't break through resistance; I called the bottom and was correct.

I sold the $165 weekly call the next day at $3.75 to create a risk free bull call spread. The credit was about enough to cover the transaction costs.

I closed my BCS at $4.50 when TSLA was at $165 about an hour before expiration.

Overall profit about 120% on capital that was at risk (for a short time).

If TSLA closes below $164.50, that means I made a good choice by closing my spread at $4.50 (90% of max payout). It is around $164.70 with 45 minutes to go - not worth the risk.

 

[Norbert]

Went up through the resistance at $165...

 

[SuryaDham]

That is a great solution, but I don't think that I have enough cash (or margin for that matter) in my account to sell shares short.

Congratulation! That was a good deal anyway!
About the problem: I recommend portfolio margin. If you are sitting on calls that will be assigned you don't need additional margin to just sell the shares that will be assigned to you over the weekend. This is true for buying in after market (probably not before OE, because then there would still be the risk that the assigned 160 calls could be called away by the sold 165 calls). So if the market closes at 169.99 you should be able to sell in aftermarket without any additional margin requirement if you are on portfolio margin.
Anyway, congrats again! You made a very good deal and did the right decision. Why take any risk if you already made 90% or so of the max. profit.

 

[Jonathan Hewitt]

Went up through the resistance at $165...

so much for end of day sell off

 

[kevin99]

I have a large position of naked put Sep2 @165 which expires in 4 hours! I hope it stay about $165 so the options expire worthless. This will boost my 15% number.

As if I could move the market, it looks like it might stay above $165. Couldn't be better for me!

And I close out the short call earlier this morning when it was $163. Not bad at all.

I will sell more OTM further out calls before the close, as a discipline to keep my account balanced.

 

[Mario Kadastik]

Dn't you just hate it when you close the position and the market only gets better

I had three naked short puts of 165, but closed the position yesterday morning at small profit when it triggered my stops. Of course that was the last high would have made 100% profit, but kept ca 12k margin so wouldn't have wanted to keep the risk...

 

[ongba]

That is a great solution, but I don't think that I have enough cash (or margin for that matter) in my account to sell shares short.

In the end, there is no good solution for something like this. My $4.50 limit order finally got struck when TSLA hit ~$165 at about 3:04 EST. I took a 10% haircut, but I think it is worth it because I got 90% of max value and I don't have to risk holding on to this spread into the last trading hour. I think stocks will go down from here as people lock in profits after a great weak and prior to the Bernanke show next week.

To sum things up:

I bought the $160 weekly call on Monday at $3.63 when TSLA hit rock bottom (I timed this perfectly, because I realized that TSLA hit $158.50 for a third time that day and couldn't break through resistance; I called the bottom and was correct.

I sold the $165 weekly call the next day at $3.75 to create a risk free bull call spread. The credit was about enough to cover the transaction costs.

I closed my BCS at $4.50 when TSLA was at $165 about an hour before expiration.

Overall profit about 120% on capital that was at risk (for a short time).

If TSLA closes below $164.50, that means I made a good choice by closing my spread at $4.50 (90% of max payout). It is around $164.70 with 45 minutes to go - not worth the risk.

good choice sleepy. No need to milk every dime out of a risk free spread and have to deal with possible exercise or shorting shares. I'd rather have a nice, relaxing weekend than worry about exercise shenanigans and plan for your next trade. Anytime you can get out with 90% of max profit is a good trade in my book.

 

[Mario Kadastik]

There was a 1.5 usd run up and then down so I guess my suggested trailing orders would have netted abive 5 usd

 

[mershaw2001]

Sleepyhead, can't you let it go to 4 pm then use margin to go short in after hours?

Edit: already asked and answered.

 

[ongba]

[FONT="&amp]From William O'Neil this morning: "Considering its recent breakout from arare high, tight flag pattern, its visionary leadership, and innovative productand business model, this stock could join a historic group of high fliers. "
http://www.williamoneil.com/reports/Tesla.pdf

Newreport predicts TSLA rise to $322. TheHigh Tight Flag pattern TSLA is experiencing generally runs much longer thanTSLA's 11 weeks. Average length 29 weeks[/FONT]

This is a good read. Does anyone know if this Oneil special report newsletter is worth subscribing to, and what is the cost? Thanks.

 

[anticitizen13.7]

Looks like the price range is holding steady in the 160's.

Quiet before the storm?

 

[32no]

An analysis of TSLA chart looking at momentum lines. The chart shows projections. (the website is tradingview.com)

https://www.tradingview.com/i/IwV27wy6/

 

[Norbert]

An analysis of TSLA chart looking at momentum lines. The chart shows projections. (the website is tradingview.com)

https://www.tradingview.com/i/IwV27wy6/

The visual impact results only from his own add-on graphics (if at all). The boxes and cartoon bubbles are punched over the interesting part of the actual data. Not a chartist, but looks like the graphics artist is just illustrating pre-conceived notions.

 

[32no]

The visual impact results only from his own add-on graphics (if at all). The boxes and cartoon bubbles are punched over the interesting part of the actual data. Not a chartist, but looks like the graphics artist is just illustrating pre-conceived notions.

I am the author, but I'm not a chartist at all, this is just my experimentation with the visual aspects of the chart. I don't even know if I used the correct terms. I think getting technical with numbers on charts and Fibonacci drawings on charts is meaningless work, because when you work with numbers, it better be pretty damn accurate to make it worthwhile. And observing charts is far from accurate based on the other charts on that website (But sometimes they are close to the general trend). I think looking at charts gives a different visual perspective on what could happen and that is as far as the usefulness of the charts go. The Fibonacci drawings (although technical in nature) are a very good way to see things that a regular chart would not show you.

Here's a version with no note boxes:
https://www.tradingview.com/x/s291KAD8/

 

[Causalien]

The visual impact results only from his own add-on graphics (if at all). The boxes and cartoon bubbles are punched over the interesting part of the actual data. Not a chartist, but looks like the graphics artist is just illustrating pre-conceived notions.

I don't use fib fan lines much, but the primary mistake the chartist is making is that the start of the fib fan is placed at the wrong spot. hence making the whole analysis inprecise.