I think everyone in that thread has managed to get overly optimistic, but it certainly is a way to build on your position if you have a certain level of risk tolerance and rigor in your trades. For context though, note that @Drezil has also lost quite a large percent of his portfolio with options as well, and is working it back up now.Visit us in "the other" thread
Options can work magic in terms of return with controlled risk.
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Words of HABIT
Active Member
For a couple of days in early 2020 at the start of covid19, Brent Crude Oil was trading negative. There was so much oil over supply with all the oil tankers full and bulk containers full that they were paying industry to take their oil.
Ironically oil prices are now spiking. Gasoline in Toronto is $1.42 litre, an all time high. This is the last horrah for oil. The next drop will be permanent.
Wrong question. The right question is how do you herd the first one? Additional individuals gets subsequently easier. But to answer; I have herded over 30 at a time. I’m literally a cat magnet and my best friend can attest to that having witnessed it several times. It’s an exceptional talent.
Do you heard the heard on horseback like a proper cowboy? I could imagine some sort of yarn ball tied to a drone could make an excellent cat herding system.
I thought you said you didn't have a Brazilian Tesla.
jhm
Well-Known Member
I see. Would you consider a position in the PR department? The first cat you'd be herding often answers to the name, "Elon."Wrong question. The right question is how do you herd the first one? Additional individuals gets subsequently easier. But to answer; I have herded over 30 at a time. I’m literally a cat magnet and my best friend can attest to that having witnessed it several times. It’s an exceptional talent.
Words of HABIT
Active Member
TheTalkingMule
Distributed Energy Enthusiast
That's just it, they aren't. They're talking.......much in the same way that General Motors is, but all they've really done is buy some Lucid shares. They've been announcing "the biggest solar farm in the world!" every other year for about 8 years. Not a panel has been installed, they just point to 2030 solar aspirations. They burn about 1M barrels of oil a day for air conditioning and don't want to negate their own portion of global demand.
For the past 5 years it's been clear there's no path for survival of Saudi Arabia, the end has been inevitable for that long.
I hope that pattern continues. Earnings Reports on the third Wednesday of the month would put them ahead of all but two of the quarterly options expiration dates in 2022 and 2023.
On the other hand, maybe the exact date won't matter. After Tesla annihilates Wall Street earnings estimates for the fifth or sixth time in a row, maybe the market will wise up and buy the rumor.
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willow_hiller
Well-Known Member
I will also add, that trading in a taxable account really changes the calculus as well.
Yesterday you could sell a 1000 strike call for 10/15 for $0.23 per share (credit of $23 for selling 1 contract). And according to the volatility at that time, the probability of the strike reaching 1000 within 7 trading days was less than 2%. So it seems like free money.
If we take a binomial model where TSLA can either be 800 or 1001 at expiry, and assuming you can buy the option back for the difference between the strike and the underlying, the expected return of the option is 23 + (0.98*0) + (0.02* -100) = $21. In fact, TSLA needs to go to about $1011.50 before the expected value drops to $0.
But now assume that liquidity dries up and you can't buy the ITM option back. Or the SP reaches a point where you no longer have the cash in your account to buy the option back. Your shares get called away, and suddenly you've created a taxable event in the thousands of dollars that wouldn't have otherwise happened. If you sell the shares at $1000 per share, and put away 25% to pay taxes, and buy back in to TSLA, you've lost 25% of your TSLA holdings you wouldn't have lost otherwise. Expected value (in terms of your portfolio value) drops to 23 + (0.98*0) + (0.02 * -25,000) = -$477
ZachF
Active Member
Having both HQ and the largest factory in Austin probably means that the share of other employment in Austin will probably grow too. They may not fully move their dev/software/engineering teams there, but the growth will probably be such that eventually the Austin locations become larger and eventually become the primary locations. Tesla can just persuade people to move if they want by offering higher wages in the Austin locations of top of the COL.
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pz1975
Active Member
Even if you stay very conservative with selling weekly bull put spreads (see other thread), one could 10x their current position in about 10-12 years by generating new cash from profits and rolling it right back in to increase their margin. Compounding margin leads to compounding profits. And again this is staying very conservative - never selling any puts or calls closer than 15-20% OTM. One has to be vigilant and learn how to manage the rare losing positions, however, before they wipe you out. This is where the learning curve is necessary.
lafrisbee
Active Member
StealthP3D
Well-Known Member
We usually interpret everything as bullish.
Unless it's actually bullish - then we interpret it as ultra-bullish!
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Knightshade
Well-Known Member
The person asking said they had multi-millions of dollars in their account already.
So apart from I've never seen an inability to rebuy a sold option on TSLA ever- they ought have more than plenty enough cash and margin to cover a trade that goes against them once in a while without a huge tax hit.
Then on top of that- your scenario requires the stock price to have jumped nearly 30% in one week with the holder somehow entirely unable to do anything to manage the position the entire time.
(and if losing LT shares is a concern, with 7 figure account values you can instead just do buy/writes where that risk is entirely erased- you buy 100 shares, sell a just about ATM call, and give up those ST shares when it exercises- enjoying premium every time and never touching your core LT shares... taxes are then only a fraction of profits with each trade... or do spreads instead where risk is fixed and you can pick which direction you want to take the risk, up or down)
Not that options is no risk money or anything... but if you've already got a 7 figure account and are ok with relatively slow "extra" gains it can be very very low risk gravy on top of HODL gains.
Likely better moved to one of the options threads for further debate though.
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StealthP3D
Well-Known Member
I think you will be surprised how wealthy you will become if you just keep doing what you are doing for several more years. If you want it faster than that, and you don't want to take on excessive risk, I can't help you.
You say you understand that "money isn't everything" but I question whether you fully embrace that. Remember to keep your eye on the ball. And in this case, the ball is life happiness. More money than you already have will not increase your happiness further (it might even reduce it). Spend less, live more. Money does not equal self-worth or make a life fulfilling no matter how much some people tell themselves it will.
Aw so true!!!! Thank you putting it all in perspective for me.
I don’t plan on doing anything differently from what I am doing. I just thought maybe there was something “more” I’m missing. But it seems to me like maybe this, being the best I can everyday in my career, being wise with money, and investing aggressively in TSLA, is truly good enough.
Lithuania via IBKR Ireland I was able to submit fractional buy order, but I set price too low because I didn't want half TSLA
I wouldn’t expect any material changes in income tax as a result of the HQ move. Generally, federal taxable income is spread amongst states to each tax their share based on various factors (i.e., sales in the state and, in certain states, payroll and property). Both California and Texas calculate their portion based only off the percentage of sales in that state.
For example, if 30% of sales are in California and 10% are in Texas, then 30% of Federal taxable income gets taxed in California and 10% in Texas. The move of the headquarters itself won’t change the state tax result since neither state uses a property factor.
Generally I would expect the company’s effective state tax rate to go down over time as the percentage of sales in California goes down. Of course, this is all general discussion since they likely have California net operating losses (and possibly credits) being carried forward and those attributes likely have reserves on them.
But I would expect Elon personally moving to Texas would be quite helpful to his personal tax situation.
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