Short-Term TSLA Price Movements - 2013

[redharel]

after watching the video i take my words back about Elon...
it seems like the reason for the dip after hours was the car not charging and not what he said
thanks hershey101 for misinterpret his words...

Because Elon said once again, its very highly valued (in a sense).

anyway, to say something against TSLA here it's like say something against alcohol in a bar full of drunks, nothing good will come up from that

 

[Krugerrand]

it seems like the reason for the dip after hours was the car not charging and not what he said...

anyway, to say something against TSLA here it's like say something against alcohol in a bar full of drunks, nothing good will come up from that

 

[brianman]

I think Krugerrand just said we're drunk on TSLA. To which I say, "Hic, no way."

 

[Mario Kadastik]

It seems at least pre-market the shorting comment isn't hurting. TSLA right now got a bracket of 164.5-166 and so far trades (albeit 900 shares) have been at around 164 region.

 

[JoNoSaisQuoi]

[FONT="&amp][B]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. "
[URL]http://www.williamoneil.com/reports/Tesla.pdf[/URL]

[FONT="Calibri"]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][/B][/FONT]

 

[Doug_G]

Some posts moved to snippiness

 

[Norbert]

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

An interesting read.

In general, it seems, since Tesla has shown that electric cars can be really good cars, the critics have moved on to target TSLA's stock price, instead of EVs, repeating similar phrases with similar attitude (over and over).

 

[fjm9898]

times sure have changed. NASDAQ used to lead the DOW. Past few days NASDAQ is laggard, heavily.

 

[Norbert]

times sure have changed. NASDAQ used to lead the DOW. Past few days NASDAQ is laggard, heavily.

I'm not sure which index to track. TSLA seems to move a second or two faster than any of them.

 

[kevin99]

It is a bit premature(4 more hours to go) and people will say I am counting the eggs in the basket, but I like to give a 2 weeks summary of how my strategy been doing:

(on Aug.30)
My strategy going forward would be mostly selling both OTM puts and calls, with the expectation of trending up. I certainly want to weight on the long side, i.e. a bit close to strike price on the puts I am selling, and farther out on the calls I sell.

Though I am wrong on "with the expectation of trending up.", the stock in the 2 weeks period is down 3%. The strategy allows decent margin for errors. My overall gain in the same period is 15+%!

It seems my estimate of 1.5% daily advantage was spot on. Given 10 days, I outperform the stock by at least 15%. The account overall gain might be added by the smaller position of SCTY and KNDI. But they are relatively small and I really didn't devote much time to them. I obviously missed a few huge opportunity in SCTY and KNDI respectively. That suggests it is hard to monitor multiple stocks at the same time. More on that later.

Yes at $168, my account is already green and then some! and the stock is down 1%! It seems I have a 1.5% cushion.

Just when I am writing this, TSLA surged past $165, which is great news for me. 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.

Honestly I am surprised how well it works out. I did made some trades in the period to adjust to the price movement. For some trades I am forced to so it not pleasant as they are about taking loss. Nevertheless once again if I am doing the right thing and be disciplined, pleasant or not, money will follows.

This brings to the focused investing discussion:

I feel more and more comfortable with my focused investment on Tesla. My diversification is on hedging. If there is unforeseeable event that Tesla crashes down to $50, I would be fine. That would be mostly caused by a catastrophic broad market event, which will sink a very diversified portfolio since all good and safe stocks will crash down with the market. So a hedged-focused investment is more 'diversified' (market proof) than a diversified-and-subject-to-market-mercy account.

I am validating the theory of "a hedged-focused investment is more 'diversified' (market proof) than a diversified-and-subject-to-market-mercy account". There are other scenarios I need to cover but I feel optimistic. In the event of catastrophic broad market crash, my hedged-focused account will fare better than the traditional diversified account.

There were suggestions about me starting a managed fund and I am starting to consider it.

 

[Norbert]

The strategy gave me a lot of margin for errors. My overall gain in the same period is $15+%!

I haven't tried selling options very much yet. Buying them seems a science in itself already. I was under the impression it requires binding a lot of capital or stocks to secure/cover them, so I am surprised you can make 15% without the underlying making huge movements.

 

[garcilamd]

There were suggestions about me starting a managed fund and I am starting to consider it.

I'd sign up. I learned a long time ago that I cannot be an expert in everything. Your knowledge and experience surpasses any that I could hope to achieve as my time to devote to learning this is limited. I would sign up immediately. Of course I realize that there are no guarantees so any money invested would be discretionary funds. Please let me know if you decide to pursue this venture.

 

[Causalien]

I haven't tried selling options very much yet. Buying them seems a science in itself already. I was under the impression it requires binding a lot of capital or stocks to secure/cover them, so I am surprised you can make 15% without the underlying making huge movements.

Yeah. Option profit is fungible. That's why it's called options. For example Ongba's covered call scheme can have a profit of infinite since the capital at risk is $0 when constructed right. But at some point in time during the construction, you can bet that the capital at risk is more than 100%.

 

[Mario Kadastik]

I haven't tried selling options very much yet. Buying them seems a science in itself already. I was under the impression it requires binding a lot of capital or stocks to secure/cover them, so I am surprised you can make 15% without the underlying making huge movements.

To sell calls you need either the stock itself to cover or you operate on margin. To sell naked puts (are there any other kind for selling?) I think the only way to operate is on margin. As an example what it ties up though. TSLA is around 164.xx right now, selling OOM Sep 20th put of 155 will give you ~$150 immediately and require a maintenance margin of $2500. So you tie up $2500 of margin for $150 credit or 6% profit. Now selling also OOM call should not increase your margin much then because only one of the two can actually occur. For example I have sold short those 155 puts (though they were worth $350 at the time so I'm $200 in plus already per contract) and now selling a $175 call (also $10 OOM) would only increase my maintenance margin a few hundred bucks netting me at the same time also ~$150 credit. So selling this OOM straddle would net me ~$300 on a margin of ~$2700 so a bit over 11% right now (selling further back in time would increase it at about the same margin). At the same time you are in profit as long as TSLA expires somewhere between $152..$178, which is quite a range. I've only done half of this strategy, selling puts as I really believe the stock is more likely to move up and a sudden upset upwards can have unlimited damage to your account (if over weekend TSLA goes to $200 you'll have lost $2500 for example). So this is not for the weak hearted Selling naked puts of course is also an option to acquire TSLA at a discount

 

[kevin99]

I have to add back a Disclaimer: Don't try it without fully understand the risk. Again get a paper account and practice it before committing real money.

The trades I've been making are fairly advanced. It requires the combination of options strategy, price movement reading and timing. When these factors are done right, the result is wonderful.

A lot of folks ask me now that I've put the Q2 battle behind, how I deal with the more regular time of TSLA? I hope I've given enough thoughts and concrete trades in this thread. However when I look back, I really didn't do anything not from the book.

I think the challenge is how to recognize the current situation and pick the right play from the book. All strategies have been documented one way or the other. None of them works all the time. It is about using the right one at the right time and continue to adapt to the market. I have tremendous respect for the market and do not pretend I have a crystal ball to tell it which way to go.

 

[Mario Kadastik]

I have to concur. I've only been options trading for ~2 years, but changing your strategy if the market proves you wrong IS A MUST. Most of the time I've "hoped" it'll fix it self it's gotten worse. Then again I've also decided to exit at a loss only to see the market reverse and float back to what would have been a nice plus. Those make you grit your teeth, but you have to stay true to the original plan that you invested for. If it involved the market moving short term towards X, but it moves instead towards Y, then correct your strategy as original input is no longer valid. Hoping is not for trading. Also, what helps is being able to day-trade so that you can exit and re-enter a position if the initial plan backfired and the stock starts to move in the wrong direction. Being limited to three round-trips per 5 trading days is a huge limitation that will make you hesitate and hope and that's bad trading...

 

[Norbert]

So you tie up $2500 of margin for $150 credit or 6% profit.

Thanks, if its calculated as a percentage of the margin requirement, then I understand.

- - - Updated - - -

If it involved the market moving short term towards X, but it moves instead towards Y, then correct your strategy as original input is no longer valid.

Problem with TSLA is, with its high volatility, you can never expect it to move consistently in one direction... would be too nice.

 

[kevin99]

Most of the time I've "hoped" it'll fix it self it's gotten worse. Then again I've also decided to exit at a loss only to see the market reverse and float back to what would have been a nice plus. Those make you grit your teeth, but you have to stay true to the original plan that you invested for. If it involved the market moving short term towards X, but it moves instead towards Y, then correct your strategy as original input is no longer valid. Hoping is not for trading. Also, what helps is being able to day-trade so that you can exit and re-enter a position if the initial plan backfired and the stock starts to move in the wrong direction. Being limited to three round-trips per 5 trading days is a huge limitation that will make you hesitate and hope and that's bad trading...

It is a tough problem to deal with when market goes against you. Whether to change course or stick to it is a tough call, and unfortunately not a scientific one.

I like to use the Tesla's Supercharger Station to make an analogy. With 3 times of other EV's regular range, the problem of installing the charging infrastructure is 10 times less challenging for Tesla. Instead of putting a station in every 50 miles or so, Tesla only needs to put one in every 150 miles. With a bigger range, you have a problem that is one order of magnitude less.

Same for trading, if your range for margin of error is tight, then you will find yourself battling with market all days long, and the day trading limitation issues as well. It is not a battle you want to fight on a daily basis as you will soon find your account getting zigzagged by the market and chipped away by trading costs. The solution is to give yourself a larger margin for errors and a real chance for your trades to work. Obviously it will require more capital to accomplish that.

With more capital I've acquired in the last 6 months, I found myself with more ease, and less stressful in trading even though the trading amount is 1 or 2 orders of magnitude larger.

 

[sleepyhead]

Problem with TSLA is, with its high volatility, you can never expect it to move consistently in one direction... would be too nice.

TSLA actually has been moving in one direction; more so than any other stock I have ever seen.

 

[Norbert]

Well, yes, above yesterday's close now (Just crossed $165).