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Short-Term TSLA Price Movements - 2013
- Thread starter Robert.Boston
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jeff_adams
Member
It's called poor research. I'd be willing to bet that over 99% of the people that short the stock and believe Tesla will fail have never driven the car.
It's sheer folly and stupidity to bet against disruptive technology if you've never seen it or understood it.
It's like saying "what's the big deal about an iPhone? My flip phone makes phone calls".
They don't get it.
Dave,
Congrats on your LEAPs investment! That is going to be a big winner come Jan 15! I wouldn't be too worried about the amount that could have been made with short term OTM options (ie sept) as I have known my fair share of traders who have wiped out b/c of short term options; they were ultimately right on direction, but wrong on timing, and thus, had to leave the game. One of the most successful investors I have come across used to say all the time that he considered LEAPs to be the 21st century equivalent of shares, and they were the only options to survive the short term volatility inherent to a growth stock such as tesla (he successfully traded LEAPS on aapl during its epic run). Curious, what was your thought process on selecting 155 as the strike for your LEAPS after the Goldman downgrade?
I was referring to the price of options now that earnings have been released and expected volatility has decreased. I'm not short, at least not the stock but I do think the next short term direction will be down, stocks go down sometimes too. I've never actually shorted any stock-- The risk/reward ratio (mostly the reward since the risk can be mitigated) isn't worth it for me. If I were rich though, and could manipulate the price, the above is how I would go about forcing my way (without revealing my plans beforehand like the Ackman/Einhorns today). Anyway, I bought the stock for $29.00 in mid 2012 after I realized it was publicly traded, hedged it with puts two weeks before every quarter until 2013 (always keeping the stock and selling the option for a small profit, except after 3Q12 I held onto them until expiration). After the 4Q12 shareholder letter, and the earnings miss, TSLA became my favorite stock. I thought this stock could be at $100 by the end of 4Q13. I regretably sold in late April (last stock I sold) for a whopping $44ish sometime after Elon announced that there would be a Q1 profit... I needed the money to buy a house. I meant to buy some calls before the Q1 release, but I was distracted by work, looking into buying a house, expecting an overall market decline, and discouraged by the new media attention to TSLA and accompanying price movements based soley thereof. I was slightly surprised that 500 more cars were sold than what I expected, but at $70 after no real new news I thought for sure the stock would tank. At $80 the next day I bought some deep OTM puts. After the gap to $97 and crap back into the 80's I laughed as I bought a lot more puts. Later that day, as it was looking like the stock was gonna fall below 80 I see the news "Musk Tweets: "Supercharger news next week. Something else this week." At this point I thought about and could have sold my puts for a decent profit--I didn't. Saw the offering coming, but I didn't predict that shares would hold $85 next day, go up on the news, or build from there. I failed to price in the transition from a stock few people have heard of, to all of a sudden the next Apple/Google. I do believe that TSLA will someday be the largest car company in the world though. However, the thread is about short term price movements...
Yesterday the stock "plummeted" $0.48 to $153.00 in a tight trading range. This was on volume of 8.94 million shares. Thursday the stock traded between $152.50 and almost $159 on 27.25 million shares, and the chart had an interesting bell curve shape which I can't say I've seen before. There are 115.16 million shares outstanding, which means 31.43% of the outstanding shares traded during market hours in the two market days since the Q2 release, and the overall price change is approximately zero. Institutional ownership is 72%. Maybe institutions sold some shares? Maybe more shorts entered or covered? Or maybe every last long term buyer, short coverer, or even momo trader sold after hours on Wednesdey to people who thought they could find other people that thought the stock was going to $200 this month. Those people then sold to day traders first bidding up and then selling the stock to other day traders first thing in the morning, and they've pretty much been trading with eachother ever since.... Or some combo thereof. Short interest was 24% in July, but the average days to cover was 1.6 days... Meaning that most of the shorts were day trades. The only way to get any decent liquidity is to borrow the shares right now. So yes, I think the short term price direction will be downward based on valuation and timing of this sentiment, and I'm willing to risk 100% of a small amount of money that it will be this week.
What I fear will happen is this... If no significantly good news prior to market open, an attempted bear raid on Monday. You'll see the price drop below 150 in the morning and look like it's going to accelerate... However the institutions completely control this stock. You might expect another PT increase from Morgan Stanley, or Tweets from Elon Musk. I'm not sure they're just going to sit there fat and sassy and let this happen... Not when they know what is happening next - Another stock offering to fund TSLA's future ramping up/building of a new factory on that new land they just purchased-- As long as this is done at a good enough price, this will drive the price to $180 after which the convertible bonds can be excercised (not sure if they are planning this quarter though). Then and only then will you see the stock slide to $125 or below as the institutions sell to a significant number of people waiting for a drop so they can catch the next ride to $300 in their minds... At $300 by the way, TSLA would have about the market cap of GM or Ford - After the sale of 20,000 cars. Ask yourself why the stock price goes up when more shares are offered... And when the sales of TSLA will compare to that of GM and Ford, and how fast it will be growing when it does... And if there are any hurdles in the way which may not have been priced in the stock.
Very interesting take on things Mr. Farmer. My view for next week is pretty much the opposite from yours:
I think that what happened last week is a perfect setup for a strong rally this week. On Tuesday, there was some profit taking by weak longs. On Wednesday shorts started piling in prior to earnings and the rest of the weak longs were shaken out. On Thursday early in the day all of the smart shorts covered their positions and limited their losses.
Then halfway through Thursday, people started taking profits and new (dumb) shorts started piling in. On Friday, it looked to me like shorts kept fighting to keep the stock low and that it finally worked, so the rest of the weak longs took their profits post earnings.
Next week: now that all of the weak longs have been shaken out and new shorts have taken their position, the first few hours of trading on Monday will set the tone for the rest of the week. There will be new buyers that heard about Tesla's "great" quarter and went to check out the car over the weekend. There will be new investors in Europe who finally got a chance to see the car. Institutional investors will continue building up positions. The only difference from last week is that there will not be any sellers left; the weak longs have left and the shorts already took their positions on Wednesday, Thursday, and Friday. I think that after a quick start to the weekend shorts will start covering their positions and the stock will continue going up.
There are other things going in Tesla's favor too: Hyperloop announcement. If it is good, then people might actually start buying TSLA, because they will realize that Elon is a freaking genius and they want to be a part of the future. If the hyperloop sounds like some pie in the sky solution then TSLA might take a hit.
On Tuesday and Wednesday there is the JP Morgan Auto conference. The auto industry is booming right now and investors are going to put more money into the automotive industry after the conference.
The biggest wild card is the overall market sentiment. We just had a bad week last week and I think that the market will recover this week. I don't think that this is the start of the correction yet, because their is no significant negative news out and no Fed meeting this week. The market will rally for the next two weeks and then start correcting about a week and a half before the Fed meeting in September.
I think that I have a 70% chance of being correct and 30% chance that the stock pulls back. I like those odds, so I still have a good chunk of Aug calls in my portfolio.
I am not trying to give any investing advice here, but just expressing my opinion for the sake of discussion. It will be an interesting week for sure.
Krugerrand
Meow
It's a good thing I don't care what the stock does short term, otherwise I'd have no time to get my hair done - what with all this deep thinking and trying to predict what's going to happen second to second.
Interesting point.
"Some people with high income buy the Model S"
in this example really means
"Some people that want to buy the Model S temporarily withdraw from savings -- temporarily raising their income -- because the S is worth it"
That says more about the value of the vehicle and how it's prioritized rather than about the income class of the owners.
I agree with Sleepyhead for the most part with his optimism. I think Monday will really set the tone for the week. A strong open and I think we will rally into the 160's. I disagree that all the weak longs are shaken out. I think there are still people in that want to see a bigger pop and will be scared out on a poor open on Monday. However, Elon won't let the bears win! Two things will befuddle the bears, crash test results and Hyperloop. These two things will keep the positive sentiment on Monday.
The Hyperloop announcement in my eyes is huge. I think its even bigger than Tesla. I don't know what the commercial airline industry market cap is, I read the aviation industry is 4.5 trillion. Either way it renders airlines obsolete IMO. Not only that, it could take market share from the shipping industry rail and cargo ships. Like the internet made the world smaller in terms of quick communication. Hyperloop could make the world smaller in the physical realm. You could live in SF and work in NYC no problem. I think it fits into Elons goal of cleaner transportation so I would like to hear Tesla having some part in the future of Hyperloop.
The Hyperloop announcement in my eyes is huge. I think its even bigger than Tesla. I don't know what the commercial airline industry market cap is, I read the aviation industry is 4.5 trillion. Either way it renders airlines obsolete IMO. Not only that, it could take market share from the shipping industry rail and cargo ships. Like the internet made the world smaller in terms of quick communication. Hyperloop could make the world smaller in the physical realm. You could live in SF and work in NYC no problem. I think it fits into Elons goal of cleaner transportation so I would like to hear Tesla having some part in the future of Hyperloop.
Curt,
First a Big Thank You to You, and Everyone, for sharing your insights, expertise and thoughts here on the TMC!
I began buying TSLA in the mid 20's and have added to my position several times along the way. For a time, with the help from this forum, I felt like a had a good feel for the stock movements and sold a small portion of my holdings on some run ups and rebought on the dips. Then I missed out on a big run up on a fair amount of shares and took your and other's advise to buy and hold instead of trying to time the market. My brother has been advocating a sell covered short term OTM call strategy to provide a kind of dividend. I have been reluctant to do this as I believe long term Tesla will become a very big company with a stock price to match and don't want to be "forced" to sell my stock prematurely. It would be nice to take some money off the table/hedge against a pullback and your covered call strategy (selling $165 Jan covered calls for +/- $20) sounds like a great way to do that. Am I correct that the biggest risk of such a strategy on the downside is that if the stock goes way down you aren't protected except that you have earned $20 per share so your loss is mitigated by the $20 and that on the upside if the stock goes above the $185 ($165 strike price plus the $20 option cost) you will be forced to sell the stock and lose any additional upside? Assuming I am following this correctly, it seems that (provided one has the cash available) you can simply buy replacement shares when the price approaches the $165 strike price. The downside of course would be the tax consequence of the gain on the shares sold due to the option being excercised but that could be mitigated by doing these types of trades in a tax deferred account like an IRA, or if that is not possible, using shares held longterm as opposed to short term (thinking in terms of US taxes here). I suppose another strategy is to buy the options back? I presume the cost to buy back the options should be much less than amount you recieved when you sold them if some time has gone by.
It looks like the Jan $165 calls are paying around $19.50 while the Dec $165 are paying around $17.50. Currently I am thinking it might be better to go for Dec calls and increase the chance I'll get to hang on to my original shares without the need for buying back the calls or purchasing replacement shares vs the extra $2. Would love to hear any feedback Curt or anyone else would like to share. This will be my first time trading options...
Thanks!
First a Big Thank You to You, and Everyone, for sharing your insights, expertise and thoughts here on the TMC!
I began buying TSLA in the mid 20's and have added to my position several times along the way. For a time, with the help from this forum, I felt like a had a good feel for the stock movements and sold a small portion of my holdings on some run ups and rebought on the dips. Then I missed out on a big run up on a fair amount of shares and took your and other's advise to buy and hold instead of trying to time the market. My brother has been advocating a sell covered short term OTM call strategy to provide a kind of dividend. I have been reluctant to do this as I believe long term Tesla will become a very big company with a stock price to match and don't want to be "forced" to sell my stock prematurely. It would be nice to take some money off the table/hedge against a pullback and your covered call strategy (selling $165 Jan covered calls for +/- $20) sounds like a great way to do that. Am I correct that the biggest risk of such a strategy on the downside is that if the stock goes way down you aren't protected except that you have earned $20 per share so your loss is mitigated by the $20 and that on the upside if the stock goes above the $185 ($165 strike price plus the $20 option cost) you will be forced to sell the stock and lose any additional upside? Assuming I am following this correctly, it seems that (provided one has the cash available) you can simply buy replacement shares when the price approaches the $165 strike price. The downside of course would be the tax consequence of the gain on the shares sold due to the option being excercised but that could be mitigated by doing these types of trades in a tax deferred account like an IRA, or if that is not possible, using shares held longterm as opposed to short term (thinking in terms of US taxes here). I suppose another strategy is to buy the options back? I presume the cost to buy back the options should be much less than amount you recieved when you sold them if some time has gone by.
It looks like the Jan $165 calls are paying around $19.50 while the Dec $165 are paying around $17.50. Currently I am thinking it might be better to go for Dec calls and increase the chance I'll get to hang on to my original shares without the need for buying back the calls or purchasing replacement shares vs the extra $2. Would love to hear any feedback Curt or anyone else would like to share. This will be my first time trading options...
Thanks!
EVNow
Well-Known Member
There is nothing to show whether the TMC members who vote are truly representative of Model S buyers or not. I'd not assume they are. I expect rich, busy executives to not be surfing TMC and answering polls (mostly), for eg.
OK.. let's not get carried away here. I work in the Aviation industry as an engineer. You can't cross the Atlantic and Pacific oceans without airplanes. I can see demand for "hyperloops" within a country's major cities, but let's see what the proposal is first.
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Hey I second your thoughts Krugerrand. But it is very interesting to read the thoughts of our passionate group members.
If you watch the Google hangout with Elon and Richard Branson from the other day, he is pretty clear that the Hyperloop is for city pairs within 1000 miles. For further distances, he envisions a SSVTOLEP (super sonic vertical takeoff/landing electric plane).
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I'm with sleepy on this one. I think that many, including myself, were picturing a repeat of last quarter's squeeze given how right we were and how wrong the analysts were. Things that may have muted it were more people saw it coming (maybe because of this forum) as demonstrated by the run up to the Q2 report, the shorts doubled down, and the overall market the last few days also didn't help. And even still, we are just off the ATH. I'm expecting a nice bounce on Monday, especially if the overall market turns around.
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I'm also with Sleepyhead on next's week's outlook. However there is another reason next week could be interesting: Tesla's participation in two Wall Street investor conferences that were mentioned at the very very end of the Q2 call. From the transcript:
Can't hurt for Wall St to get some attention from Tesla execs next wk. Who knows, we just might not have a normal "Tesla Tuesday" next week.
Can't hurt for Wall St to get some attention from Tesla execs next wk. Who knows, we just might not have a normal "Tesla Tuesday" next week.
Cool, I haven't watched the hangout yet. Some of my assumptions were from evacuated tube proposals I have seen. I wasn't aware he was envisioning the hyperloop for city pairs like that. I guess it matters what the top speed it can reach, if it isn't extremely fast as evacuated tube designs would allow it wouldn't make sense for cross continental trips like San Francisco - Chicago or NYC. Airlines would still win out there. We will see more Monday I guess
He gave a few more details, like not a vacuum, very low friction but not frictionless, at least 250 mph, IIRC. Sounded pretty cool and actually had me worried that if successful as a new mode of transport, it might adversely affect the need for cars (including Teslas).
The hyperloop is already a pretty far fetched idea, so I don't see any problem extrapolating to the extreme. There have been proposals for a Bering straight bridge for ages, if we are talking about fast enough on-demand transportation, then building the bridge could end up becoming economical. I would love to see the airline industry have competition, the industry is stuck in the stone ages and is not very consumer friendly. Just like the auto industry is/was before Tesla.
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Yeah, for cities close in proximity, it would pose direct competition for long range EV's. However, if the capsules could fit Tesla car models (I believe he has said they would be about 2 meters in diameter, so it is not out of the questions). Then imagine driving up to the hyperloop station in LA and then 30 minutes later exiting in SF all while relaxing in your Model S.
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