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Short-Term TSLA Price Movements - 2013
- Thread starter Robert.Boston
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Does this also apply to margin accounts? I did in fact intend to make a gain, and wasn't expecting it to go much higher...however just touched $179.
Oh, maybe it doesn't. I did this in my non-margin 401k.
Check to make sure, but you are probably ok in margin accounts as long as you have plenty of margin left.
Norbert
TSLA will win
I think what you said doesn't apply to margin accounts at all, as there doesn't appear to be any notion of "unsettled" cash. BTW, my account made a plus of more than 12% today, even though I sold too early speaking in hindsight.
I'm not. Just look for your next opportunity and act accordingly.
Never regret past imperfect successes, or you'll always be unhappy.
not 50M but more then 20M for sure, even the volume in this thread is bigger today
who is Debbie Downer?
Sunnyday
Member
Ah, so I'd basically be sell these calls to generate cash to buy calls? Sounds like a great way to get some cash, but if I'm turning around and using it to buy other calls in anticipation of Q3 (or some such) then won't my gains on calls I bought be offset by losses on the ones I sold?
Citizen-T
Active Member
I asked this in the n00b investing thread a while back and this reminded me I hadn't seen an answer
I'd like to consider buying options, but I've got zero free cash and that's not going to change anytime soon, so my only way to buy options would be to sell my stock.
You are talking about stock replacement. Honestly, I've considered it at several points. Sell your shares and replace it with deep in the money calls for the same number of shares. Deep enough that you are just about at the money even after considering the premium. Then you get all of the upside but have limited your downside to whatever the cost of the calls was. Since TSLA doesn't pay a dividend, there isn't really too much of a difference between the two positions and you can go use the rest of your capital to do other things.
Obviously, the downside is that you can't wait indefinitely for the stock to go up. So you have to have some confidence that the general direction is upward. You also lose resolution. If you had 100 shares and replace it with 1 call, now all your trades are either 1) sell everything you've got, or 2) double your position. So I think you need to have at least a few hundred shares to minimize that effect.
I think the time to do something like this was yesterday when the premiums on options were pretty low. I also think you want to go pretty far out into the future (to approximate common stock). Today is probably not the day for such a change in strategy.
I'm sure other's here can speak more completely about the pros and cons. I've only toyed with the idea.
Definitely did not expect TSLA to keep on going higher and only gain modestly. I guess I'm not alone selling out early in the morning. One thing I learn is to now have patience to jump back in when things settle and not to buy on greed and impulse. The last few weeks shows that TSLA likes to go up and down a lot. So it's my expectation that it'll likely go up and down again.
Thanks, much appreciated. The talk about volatility made me think I'd probably lost my opportunity for today, but I figured that made it a good learning opportunity for the future.
Mario Kadastik
Active Member
Not really. You can let the initial calls expire and the stocks get called away. So you can just consider the trade completed and your profits taken. Any daily value of the calls and options then is just virtual as you have sold your stock for 40 + premium (~140). If you now buy atm calls for some of the cash, then you can take advantage of any upwards movements and shouldn't care about the prior position at all. I guess you just choose the expiration date when you want your stock to be called away and that's that (there is no price diff between Jan 2014 and Jan 2015 call for the 40 strike).
not 50M but more then 20M for sure, even the volume in this thread is bigger today
who is Debbie Downer?
Debbie Downer is a character played on Saturday Night Live by that blonde lady.
You are not going to get very high volume like that all of a sudden. Last time as we were making new ATH's TSLA was already trading 10 - 20 million volumes on normal days, and that is why really good days had volumes at 20 - 30 million.
We were in a subdued period of 5 million volume, so 20 million will be huge volume anyway.
It is all relative.
What I was getting to is that I think you are overthinking this volume thing. It is definitely a high volume break out day.
So I own 175 calls that expire tomorrow. I'm trying to determine my exit strategy. Is 180 going to be the peak before they expire? I already sold enough of my position to pay for the calls, now I just need to decide what profit level to take.
My short term option trading strategy is to take more risk hoping for the big gains, but to not get greedy when selling (It is more important to take a profit before it disappears than it is to time the peak for max profit.) My long term investing strategy is to buy on the dips and never sell.
My short term option trading strategy is to take more risk hoping for the big gains, but to not get greedy when selling (It is more important to take a profit before it disappears than it is to time the peak for max profit.) My long term investing strategy is to buy on the dips and never sell.
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Yes.
No. The losses on the sold LEAPS will be offset by the gains in the stock, that you keep in this strategy.
The stock has a delta of 0.015 against the sold LEAPS (in the Jan2015 40 example).
Meaning for every 1$ TSLA goes up the stock goes up by $1 and the sold LEAPS go down by $0.985. So over all you are still up by $0.015.
Both basically cancel each other out. Your gains or losses will then come from your future plays. J
And BTW: As Citizen-T said, selling shares and buying calls is probably not a good idea currently. But keeping the shares and selling super-super-DIM calls can be done any time, because there’s virtually no time-value left in the option. They just have a wider spread unfortunately, so you would lose a bit on that.
Just think and calculate it through if it makes sense for you. And what every you do: Make sure that you fully understand what you are doing and that you feel absolutely comfortable with it. Only then will you have nice sleep at night.
Good luck!
I thought Amy Poehler played Debbie Downer (it is Rachel Dratch). I am really bad with actors and actresses, quite frankly because I don't care about them, their names, or personal lives. All I expect is for them to do a good job of acting.
Mario Kadastik
Active Member
Put a trailing stop order? If it moves up it moves up, if it starts to come down you sell. The risk of this strategy is that if right when you do this is the peak, then you lose bracket + trailing amount. If it does move up somewhat then that offsets it. If it moves up a LOT, then you'll grin happily even if you're away from the comp and the trade system takes care of catching it close to the top. However too small a trail amount and a too high a trail amount both are bad, one's too prone to fluctuations and other gives up a lot of profit
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