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

[abasile]

Tax implications aside, this should be no more stressful than watching the stock skyrocket while you’ve chosen to tie up your buying power with short puts rather than long shares. That is the equivalent scenario.

Selling cash-secured puts that are significantly out of the money can be a more conservative approach than purchasing long shares, and can thus be a way of supplementing a comparatively large position in long shares. The most likely scenario is that the puts never get exercised and you keep the option premium, which should hopefully be quite a bit more generous than interest on a CD or bond. If the puts do get exercised, then you buy the stock at a significant discount below what you would have otherwise paid in the beginning for long shares. The stock may go lower still, but if you're a believer in the future of the company, then that should be tolerable. If the stock runs up quickly, then you at least get the benefit of being able to close out the puts early, at low cost.

Take, for example, the TSLA June 2020 $150 put, which could have been sold 25 days ago for an $11/share premium when TSLA was trading in the low $240s. Selling a single put would have effectively tied up about $13900 cash (or equivalent amount of margin), with a return of $1100 over about nine months assuming no exercise. It's undoubtedly riskier than a CD or Treasury, but with a significantly greater return (about 10.5% APY vs. maybe 2% for a CD). The worst case scenario is owning 100 more TSLA shares instead of that cash. If TSLA runs up quickly and you exit the put early, then the effective APY is much higher. That June 2020 $150 put is now trading around $7.35/share, so buying back the put today would have made for an effective APY of about 45% on that $13900 cash.

About 25 days ago, at $243/share, $13900 could have been used to buy 57.2 shares of TSLA. Today, at $258/share, those shares would be worth $14758. Obviously, that's more than double the gains from selling/buying the June 2020 $150 put, but the risk would have been significantly greater. If the share price were to drop to, say, $180 then the put could still be held to expiration, still with an effective APY of 10.5%.

Also, in general, some investors have found TSLA to be a good stock for selling puts because they believe that the stock is undervalued, the risk is overstated, and there is no shortage of people who want to effectively short TSLA (or hedge their long positions) by purchasing puts. This tends to drive up the option premiums relative to the actual risk.

 

[anthonyj]

ARK dumping TSLA for ROKU lol

 

[Dan Detweiler]

When will Model 3 get a real competitor?

Twitter

When Model Y comes out.

Dan

 

[Curt Renz]

ARK dumping TSLA for ROKU lol
View attachment 466542

Nevertheless, the top ARK holdings after today's trading:

ARKK
12.71% TSLA
07.62% SQ

ARKQ
12.09% TSLA
08.99% SSYS

ARKW
10.96% TSLA
08.50% SQ

ARK's policy is to not buy any stocks that are more than 10% of a fund, and perhaps sell a small portion to raise money to buy high conviction stocks that have dipped. The idea is to maintain the diversity that fund investors expect.

 

[Thekiwi]

OK if the Model Y in Q1 story is true (cleantechnica had 2 separate sources so makes it more solid than a rumor), then it drastically changes the near term investment profile on Tesla.

The medium term outlook (2021 Q1 onwards), after Model Y was supposed to enter volume production, already looked REALLY good with easily 125k-150k a quarter and growing high ASP/high margin cars bringing Tesla solidly into profit, with Semi/roadster/pickup/solarroof ramp still to come.

A Q1 start for Y deliveries likely brings forward the likelihood of solid ongoing sustainable large GAAP profitability by at least 6 months I think, to Q3 2020, possibly Q2 depending on ramp. Q1 might be a bit of a loss as the transition/ramp starts, but no one will care if it means Y starts ramping.

Hold on to your slushee.

 

[AlMc]

My advice, despite the 'CleanTechnica' article, ......Don't count your model Ys before they really hatch.

 

[Curt Renz]

As some have suggested here, it's beginning to appear that the company's guidance of late 2020 deliveries for the Model Y may have been a deception to prevent "osbourning" the Model 3. In any event, the company will likely encourage the purchases of Model 3s before the federal tax credit completely expires at the end of 2019. Then if the rumors are valid, Tesla may surprise most people by delivering the Model Y in early 2020, while expecting the potential Model Y buyers to be unconcerned about the lack of a tax credit.

 

[Unpilot]

How many Tesla owners would have bought their cars without the SC network?
I know I wouldn't have. It seems to me this lack of robust charging network will hold back any new entrants.

It's a real chicken and egg problem for all other car makers. Chevy Bolt being a prime example.

All the promise of future charging options are just that... promise's. Large scale adoption for other manufacturer's will not happen till this gets built out.
In the meantime one company has the Rd to itself.

 

[heltok]

Hope this story blows up. Some leaked images and 8mins of videos of those monkeys, dogs and cats that VW are using to test their ”clean diesel”:
Monkeys scream out in pain in secret footage recorded at 'German lab' | Metro News

This is from the same company that makes a vegan car with leather manual...

 

[SoGA Fan Club]

I need to check again but my Model S took a pretty big hit after 2 years on KBB ... likely due to Model 3 cannibalization... but we can agree to disagree on this one ... Teslas are continually improving making older models less desirable... any way my experience is normal depreciation...not sure i agree with your statements on gasoline counterparts either my 2007 4 runner cost $30 K new and Kelly BB still has it a $10K 12 years later ... pickups and other SUVs are also holding value .... I am long TSLA but trying to be realistic ...this thread has some reality check ...After low ball offers by Carmax and Tesla, sold it myself - Huge Difference!

fire away !!!

Go try to buy a Model X 100D, which now sells new for $85k, for less than around $73,000. And that's for a pre-raven model with 30 less miles of range. It is shocking how well an X100D holds its value.

 

[Beltsbear]

Go try to buy a Model X 100D, which now sells new for $85k, for less than around $73,000. And that's for a pre-raven model with 30 less miles of range. It is shocking how well an X100D holds its value.

Got to disagree on that one. A lot of those model X were bought north of 100k. Tesla dropped the price, but no, those owners are not doing well with resale value. Great cars though. People buying ravens will be happy as they will probably only drop 10% in vaLue even after a year of use.

Early model 3 owners suffered as well, but 2019 owners will see good resale values in their future as the new price stabilizes.

 

[Beltsbear]

Hope this story blows up. Some leaked images of those monkeys that VW are using to test their ”clean diesel”:
Monkeys scream out in pain in secret footage recorded at 'German lab' | Metro News

This is from the same company that makes a vegan car with leather manual...

It makes me angry to see this. Totally unnecessary. Since we are already experimenting oh humans with pollution, all we need to do is measure.

get an iot air quality sensor. Place them in people’s homes. Some by major roads. Some not. Watch data. Real world results on actual humans.

 

[theschnell]

As some have suggested here, it's beginning to appear that the company's guidance of late 2020 deliveries for the Model Y may have been a deception to prevent "osbourning" the Model 3. In any event, the company will likely encourage the purchases of Model 3s before the federal tax credit completely expires at the end of 2019. Then if the rumors are valid, Tesla may surprise most people by delivering the Model Y in early 2020, while expecting the potential Model Y buyers to be unconcerned about the lack of a tax credit.

I think Elon said “volume” production by late 2020. Even if they do roll out a few Model Y in late Q1, they may still not hit volume until late 2020. I’ll be surprised if it happens sooner, but I’ll be very happy if it does. Just not banking on it.

 

[adiggs]

Tax implications aside, this should be no more stressful than watching the stock skyrocket while you’ve chosen to tie up your buying power with short puts rather than long shares. That is the equivalent scenario.

The primary difference goes back to what you're trying to accomplish. I would sell puts in order to raise better cash than putting that cash into a short term bond fund, where either way, I'm looking for low risk short term cash generation (I realize that selling Tesla puts is more risky than t-bills etc..).

As long as that's what you're angling for, then you'll accomplish the end result.


If your intention is to be long the stock for a long time (buy and hold), then selling puts has the potential of failing you at the critical moment when buy and hold investing works best - when the market suddenly realizes that Tesla is reasonably valued at $1500/share, but is actually trading at $250/share.

That's what happened, to my benefit, back in 2013. The stock was trading in the high 20's and low 30's, bouncing around. Probably a good swing / short term trading stock back then too. Then stuff happened, and the market sort of suddenly realized, all at once, that the stock wasn't priced correctly. It took a few months of a lot of up, and a little down, before the share price finally peaked at $180.

People that had sold puts to capture a little extra cash, but didn't get exercised so actually ended up owning shares, had to keep selling puts on the way up to capture at least some of those gains, but mostly missed out on the whole move.

As long as the share price doesn't move a LOT, then selling the puts is a great way to go. It's also a great mechanism for capturing some short term gains outside of your core long term holdings, with the possibility that you really time things great and end up with some additional shares for your long therm holding, at a discount from a valley in the share price (this is the negative / downside outcome from selling puts - AS LONG AS you'd like to own some more shares).

Once you own as many shares as you want to own (or a few more), then it's probably time to start selling calls until you get the extras called away (and then go back to selling puts).


For me personally, that's more energy than I want to invest. Which is why I don't, and another reason I'm a buy and hold investor. Following the business prospects of the company and markets - very interesting and I love doing it. Figuring out entry and exit points, getting the timing right, and so forth - that makes me tired, and mostly loses me money (I'm bad at picking entry / exit, but hey - on a 10+ year time horizon, I pretty much can't miss).

 

[RobStark]

my 2007 4 runner cost $30 K new and Kelly BB still has it a $10K 12 years later ... pickups and other SUVs are also holding value .... I am long TSLA but trying to be realistic ...this thread has some reality check ...After low ball offers by Carmax and Tesla, sold it myself - Huge Difference!

4Runner and Land Cruiser are either ICEv residual value Kings or close to it.

In Los Angeles 4Runner TRDs go for over MSRP new.

4Runner is far from typical ICEv.

 

[ZachShahan]

My advice, despite the 'CleanTechnica' article, ......Don't count your model Ys before they really hatch.

I condone that.

But not the quotation marks.

 

[ZachShahan]

OK if the Model Y in Q1 story is true (cleantechnica had 2 separate sources so makes it more solid than a rumor), then it drastically changes the near term investment profile on Tesla.

Our primary source has a superb track record. Have published some previous info from them and held back on bunch of other info, but it's all proven to be solid.

That said, a Q1 2019 target from Oct 2018 is just that — I'll also wait until it arrives before counting Ychickens.

Edit: That said, I've also expected for more than a year that the Y would come earlier than planned. Just seemed possible and logical. No inside info before this, and no, the source of this story is not a major exec you know by name.

 

[X Fan]

Hope this story blows up. Some leaked images and 8mins of videos of those monkeys, dogs and cats that VW are using to test their ”clean diesel”:
Monkeys scream out in pain in secret footage recorded at 'German lab' | Metro News

This is from the same company that makes a vegan car with leather manual...

That is absolutely horrifying and sickens me to see that (not your post though..thanks for making me aware).

 

[sparcs]

Our primary source has a superb track record. Have published some previous info from them and held back on bunch of other info, but it's all proven to be solid.

That said, a Q1 2019 target from Oct 2018 is just that — I'll also wait until it arrives before counting Ychickens..

Was there a sense of when volume production would be achieved for Model Y after initial start in Q1?

That's really the key information.

 

[Curt Renz]

...
That's what happened, to my benefit, back in 2013. The stock was trading in the high 20's and low 30's, bouncing around. Probably a good swing / short term trading stock back then too. Then stuff happened, and the market sort of suddenly realized, all at once, that the stock wasn't priced correctly. It took a few months of a lot of up, and a little down, before the share price finally peaked at $180.

People that had sold puts to capture a little extra cash, but didn't get exercised so actually ended up owning shares, had to keep selling puts on the way up to capture at least some of those gains, but mostly missed out on the whole move.
...

My TMC post on 2013 MAR 12: Short-Term TSLA Price Movements - 2013