Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[mejojo]

...back to TSLA...buy with cash on hand and hold forever is still undefeated.

False

 

[woodisgood]

Exercised some 12/18 contracts, taking 500 shares off the table.

That’ll show them.

 

[joh01652]

I've not seen this article posted yet--lots of trading and rebalancing is to take place Friday, according to Silverblatt:
Tesla stock's S&P 500 entry to drive tsunami of trading volume

From the article:
'In order to emulate Telsa’s approximate 1.58% weighting, indexers including Fidelity and Vanguard will need to shift $83.1 billion into Tesla shares on Friday in addition to conducting a rebalancing of a little more than $20 billion. The rebalancing will dwarf the previous record of $50.8 billion set in September 2018.

“It is going to be an enormous trading day,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, noting that triple-witching day – or the expiration of stock options, stock index futures and stock index option contracts – will add to volatility and produce record trading volume.

The other 504 members are expected to face “downward pressure” as indexers sell those shares to account for Tesla, Silverblatt said.'

 

[Tslynk67]

Are we sure that S&P inclusion doesn’t mean that a gajillion shares of Tesla need to be shorted by index funds in this period instead of bought? Everything is upside down.

my meager take is that MM are treating this week like every other week with option expiry targets. They know that all the index fund shares are pre-negotiated to happen at the closing cross. They aren’t worried about any additional volume messing with their weekly option holder robbery. However, I would love for this to be wrong

Well yeah, because there is no additional volume. It's a bonanza for the MM's with all the calls they've been able so sell since the inclusion announcement and although we may get a squeeze, it's looking like it will come after-hours on Friday so, THEY win once again.

But, we should neither lose sight of the fact that we are 50% up since the announcement and I personally see no reason why that should drop much after the event. So for HODLERS it's beautiful (and I still count myself as one of those, but reserve the right to sell everything if we jump 50% at any moment )

 

[M|S|M MYP]

Somehow, i get the feeling this board's sentiment will be better come next week Then again, maybe it won't.

 

[Singuy]

Both long and short options positions are bets on certain outcomes. I don't think you can label one as "the house" and the other as "the gambler".

Statistically, those who sell calls and puts have 80% of a positive outcome. Those are better odds than any casino owners. The risk and reward of course are adjusted accordingly.

 

[Cobbler]

Is this Elon's way of saying $TSLA will rise slowly?

 

[Artful Dodger]

Emmet Peppers sold half of his Jan 15 calls.

https://twitter.com/EmmetPeppers/status/1337440865262788613

He explains why. (The tweet below was actually before his announcement.

https://twitter.com/EmmetPeppers/status/1337420248689958914

This is bloody. Ouch!

Emmet Peppers knew what he was doing.

Really? To me it looks like he sold half his position on near Friday's bottom, then missed out selling any on Monday's top:

SP increased about 7% spanning that weekend break (gee, 'pop' on Monday, who'd guessed that?). Then with the typical 3x leverage on options contracts, he might have already left 20% on the table. That's ~ $300K on ~$1.5M in contracts

And it's not Jan 15th yet (exp. date for his contracts). I think it's early to pass judgement on whether he "knew what he was doing".

Looks more like gambling in a rigged casino to me. Tell us, do you think Mr. E. Peppers will hold any TSLA shares when it hits $10K/share in 2027? HODL'ers will be there, regardless of the games.

TL;dr Trading Options isn't investing, its gambling.

 

[Artful Dodger]

MMs cannot help themselves and nobody else .

FTFY

 

[Chunky Jr.]

Somehow, i get the feeling this board's sentiment will be better come next week Then again, maybe it won't.

For me, I'm mostly puzzled and trying to reconcile the predictions of massive buying, and thus an increase in the stock price, with what we're seeing in the market this week.

 

[vikings123]

Trading Options isn't investing, its gambling.

 

[ByeByeJohnny]

Somehow, i get the feeling this board's sentiment will be better come next week Then again, maybe it won't.

As someone with about 5% of my total in options I would still be very happy if we exit next week above 600. With everything coming in 2021 that would be a fantastic starting point for the next run-up.

 

[dl003]

Really? To me it looks like he sold half his position on near Friday's bottom, then missed out selling any on Monday's top:

View attachment 618220
SP increased about 7% spanning that weekend break (gee, 'pop' on Monday, who'd guessed that?). Then with the typical 3x leverage on options contracts, he might have already left 20% on the table. That's ~ $300K on ~$1.5M in contracts

And it's not Jan 15th yet (exp. date for his contracts). I think it's early to pass judgement on whether he "knew what he was doing".

Looks more like gambling in a rigged casino to me. Tell us, do you think Mr. E. Peppers will hold any TSLA shares when it hits $10K/share in 2027? HODL'ers will be there, regardless of the games.

TL;dr Trading Options isn't investing, its gambling.

Something worth mentioning though, is that IV was crushed on Monday so it's hard to say if he left much, if any, money on the table.

 

[Knightshade]

Agreed that shares held by front runners will generally satisfy demand by funds. But what's to say front runners will sell (to those funds), majoritively, at Friday's market close?

it's a game of chicken at that point.

Whoever sells the first 120 million (or whatever the real # is) of shares at the lowest price books their inclusion profits, the rest are left holding front-run shares nobody needs.

(obviously those shares'll go up long term- but it's not why front runners bought em)

It's also why I mentioned some time ago the folks putting in limit sell orders in the 4-figure range for this event were fooling themselves if they thought they'd execute. I don't expect there to be any shortage of folks who front-ran at 450-500 unwilling to take 2x profit in a month on Friday.

Statistically, those who sell calls and puts have 80% of a positive outcome. Those are better odds than any casino owners. The risk and reward of course are adjusted accordingly.

Yup.

What about ITM and ATM options? If I sell you a $600 or $700 put expiring on Dec 31st, am I still the house, and are you still the gambler?

The $700 you're definitely the house. You made a profit on those shares regardless of the outcome. The worst thing that can happen is you end up capping how MUCH profit if it goes WAY over 700 by then.

The 600- probably still the house honestly... you almost certainly paid less than 600 for the shares, and collect a premium... probably a big enough one SP would have to go up a fair bit from here before you were even capping profits on it exercising.

Also see above

 

[Right_Said_Fred]

Trading Options isn't investing, its gambling.

I agree with most of that sentiment. But I think it applies mainly to buying options. Selling (covered) options is a whole different game.

Selling call options against shares is still tricky, as you may lose shares you want to keep and may not be able to buy them back at a lower level. But selling puts doesn't have many disadvantages compared to just buying shares. Stock drops, you get shares with a discount. Stock stays stable, you keep the premium. Stock moves up, you keep the premium and sell new puts for more premium (at a higher level).

 

[Knightshade]

I agree with most of that sentiment. But I think it applies mainly to buying options. Selling (covered) options is a whole different game.

Selling call options against shares is still tricky, as you may lose shares you want to keep and may not be able to buy them back at a lower level. But selling puts doesn't have many disadvantages compared to just buying shares. Stock drops, you get shares with a discount. Stock stays stable, you keep the premium. Stock moves up, you keep the premium and sell new puts for more premium (at a higher level).

The downside to selling puts is the cash you're locking up to cover them rather than having them in shares or options.

(obviously does not apply if you've got the highest options trading level that lets you sell naked puts- but does leave you with the risk of suddenly needing to come up with the cash to buy X times 100 shares with X being the # of puts you sold that exercised)

 

[Artful Dodger]

With the Puts and Calls being pretty close to equal above the $600 strike THEY have no problem pushing the share price down and paying out the Puts.

Indeed. Correct me if I'm wrong, but also can't a shareholder executing a PUT also result in a sale of those shares? I mean, beyond simply selling the contract for its cash value?

If so, is that also a way for Index funds to acquire shares? They may gladly pay a higher-than-market price for those shares, because their need is greater.

Cheers!

 

[StarFoxisDown!]

For me, I'm mostly puzzled and trying to reconcile the predictions of massive buying, and thus an increase in the stock price, with what we're seeing in the market this week.

But it never should have been expected that massive buying would happen Mon/Tue of this week. By rule for most of the funds, they couldn't even start to buy until today and the expectation should that most of the buying will happen Thurs/Fri and Mon/Tues of next week

I think a lot of people got expectations that the stock would continue to be front runned into the index buying but it's clear that this point that front running stopped about 2 weeks ago. Volume has been low for the past week and a half

No one should really be surprised that MM's are doing their thing while they can and volume is low.

 

[JRD1]

I recently set up a ROTH TD ameritrade IRA, and though I didn’t ask for it, was approved for margin use on the account in addition to selling/buying covered calls/puts.

I have not yet used them, and probably won’t for a few years until the account has room to grow into 5 digits, but I see margin options on it there that I don’t have on my main Ameritrade account.

edit: also for TSLA relevancy, i an unsurprised that the SP is being squished right now. It always seems to do the opposite of what it should be doing.

though glad I bought back my covered put yesterday rather than trying to squeeze in a few more days of gains! Good timing that. Usually that’s opposite for me, lol.

I have a Roth with Ameritrade and know they allow some options but I don't think a margin account is legal for that type of account.

 

[Singuy]

I agree with most of that sentiment. But I think it applies mainly to buying options. Selling (covered) options is a whole different game.

Selling call options against shares is still tricky, as you may lose shares you want to keep and may not be able to buy them back at a lower level. But selling puts doesn't have many disadvantages compared to just buying shares. Stock drops, you get shares with a discount. Stock stays stable, you keep the premium. Stock moves up, you keep the premium and sell new puts for more premium (at a higher level).

This is only if you are a perma bull on the stock. No one ever lost money when their shares are called away, just like no one lost money by booking profit. Losing potential gains is only an argument against stock manipulation.

Many stocks on the market that actually have a peak before dropping down to nothing. You wouldn't want to be the put seller there. Gopro, fit bit, Nikola, list goes on and on with actual peaks. Not every stock ends up being microsoft/apple/amazon where there is no peak.