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Short-Term TSLA Price Movements - 2013
- Thread starter Robert.Boston
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Mario Kadastik
Active Member
Extremely risky. What I'd do is get N deep OTM calls. Sell most of them on day of earnings before market close so that your net cost is zero or you took some profit and then run the others through earnings hoping for a MAJOR move up. The IV crunch the day after earnings hits the OTM options hardest. The stock really has to move a lot to make them keep value so if the stock is hovering around $195-$200 and you hold $225's, then it really has to move +$30 just to make the options retain value. Other option is that you sell even higher strike calls for delayed construct pre-earnings and then run risk free through earnings.
Exactly this.
That is why I said "IF YOU ARE DISCIPLINED." It is easy to get greedy and lose all of the profit you made on my strategy as well as your initial capital.
If you are going to get greedy then don't use this strategy. You might get lucky once, but you will lose money in the long run.
This worked last time because TSLA spiked up 15% post earnings. If it doesn't go up that much and stays flat then you will get huge volatility crush at market open and suffer a huge loss.
I've already got a decent amount of my free cash in Nov 16th 175s and 180s. I'm into my margin account by just a bit (it's about 7% of my total), so I'm not sure there's much else for me to do until earnings. Except perhaps a pure short term earnings play, but it has to be a fairly clear choice to want to dig into margin any further (I hate debt in general and margin interest isn't cheap).
I am learning how IV and time decay can really hurt/help very short term options.
For example on Friday Oct 4 when the "Fire Sale" seemed to be done and momentum had turned positive I wanted to buy calls, but with the quick drop and bounce back during the week IV was still high.
However as soon as I read Elon's blog post I bought 25 contracts of the 11 Oct $185 weekly calls (around $3.50). Since these were 5 days to expiration and OTM the time premium was low. The market only had 15 minutes to digest the blog information and TSLA was trading around $181.
My exit strategy (as Mario and sleepyhead pointed out it is important to have one) was to see if there truly was a rise on Monday morning and set trailing stop sell orders for the 11 Oct $185 calls since I wanted to get out quickly while IV was steady or rising.
If TSLA traded flat or dropped I was resolved to sell at breakeven or a slight loss Monday or Tuesday at the latest depending on how volatile the stock was.
The stop orders triggered at the little hiccups on the way up Monday morning at $4.50 and $5.40 for a nice gain when TSLA was trading around $184. I could have set looser stop values but I preferred to exit rather than go for the maximum gain possible since this was a very short term trade.
For example on Friday Oct 4 when the "Fire Sale" seemed to be done and momentum had turned positive I wanted to buy calls, but with the quick drop and bounce back during the week IV was still high.
However as soon as I read Elon's blog post I bought 25 contracts of the 11 Oct $185 weekly calls (around $3.50). Since these were 5 days to expiration and OTM the time premium was low. The market only had 15 minutes to digest the blog information and TSLA was trading around $181.
My exit strategy (as Mario and sleepyhead pointed out it is important to have one) was to see if there truly was a rise on Monday morning and set trailing stop sell orders for the 11 Oct $185 calls since I wanted to get out quickly while IV was steady or rising.
If TSLA traded flat or dropped I was resolved to sell at breakeven or a slight loss Monday or Tuesday at the latest depending on how volatile the stock was.
The stop orders triggered at the little hiccups on the way up Monday morning at $4.50 and $5.40 for a nice gain when TSLA was trading around $184. I could have set looser stop values but I preferred to exit rather than go for the maximum gain possible since this was a very short term trade.
Yes, which is why i will hold them if i think a good Q3 beat is coming for a gap up again. If not then yes, i plan on selling market close day of ER. I am looking for the Beat though.
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everman
Member
Thanks for the recent information about OTM November calls. I'm holding Nov16 $225's that I picked up < $5, and will watch to sell them late in the day before earnings.
At the same time, I've been trying to figure out if we will gap up after earnings the way we did for Q2. That would require an excellent beat and guidance revised up. From what I can tell on the thread dedicated to tracking VIN's, it seems that they are estimating production is > 600/week, approaching 700. The Jeffries estimate just revised up from 5.35K to 5.5K delivered. If the rate was anywhere near 600/week on average, won't that put the number near 7K? That's a significant beat.
Has anyone else seen any firms estimates of total deliveries and if there have been any revisions upwards? I guess my point is that if the consensus is low, there could be another gap up in price post earnings.
At the same time, I've been trying to figure out if we will gap up after earnings the way we did for Q2. That would require an excellent beat and guidance revised up. From what I can tell on the thread dedicated to tracking VIN's, it seems that they are estimating production is > 600/week, approaching 700. The Jeffries estimate just revised up from 5.35K to 5.5K delivered. If the rate was anywhere near 600/week on average, won't that put the number near 7K? That's a significant beat.
Has anyone else seen any firms estimates of total deliveries and if there have been any revisions upwards? I guess my point is that if the consensus is low, there could be another gap up in price post earnings.
We have a Q3 earnings thread for all of this talk. (remember cars in transit to, so some may have been produced not recognized since they have not been delivered.)
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I agree that we might see a good beat and that your strategy might work again, but I was just pointing out this detail for others who might have thought that your strategy is a sure-fire way to make money.
everman
Member
Ah yes. Thanks. Didn't mean to get too off topic. I'm glad you're looking for the beat as well. Somehow watching TSLA approaching Q3 feels like the run up to Christmas a a little kid! I'm glad to see the continued strength today.
kevin99
Member
I also sold Oct $195, $200 to hedge my other position. Down to $183 now. Yep, the hedge works like wonder. It stabilizes my whole account. Otherwise would be elevator move up and then down.
I thought I would do this by the end of day. However it could be we have seen the action for the whole day. Once I hedged, the range bound move impacts little to my account.
Hopefully, nothing. The 17th is the unofficial estimate of the beginning of US debt default problems if Congress fails to pass a debt ceiling increase before then. So it's a macroeconomic force affecting the market at large, which includes TSLA.
Gtoffo
Member
Did not expect this at all. I was caught completely with my pants down. Don't really know what to do now.....close my short term positions while still up or wait for a comeback.
sub
Active Member
I have this feeling that the word is out on TSLA and earnings beats will not be as big of a surprise as they have been these last 2 quarters. I don't think the price is going to move up significantly post earnings and if it does I think it will come right back down. I want to take advantage of this. I was unaware that volatility rose that much the day of earnings release, good to know. Would it not be a good idea to hold calls through near the end of that day, then turn around and be a seller of OTM calls right before closing? This way the high volatility can be taken advantage of twice. Also, Volatility doesn't affect leaps that much in the short term correct?
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