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

[HG Wells]

Looking for recommendations.
Have a fair number of Jan 17 2020 calls at 350.

1. Sell now and convert to stock.
2. Roll to february.
3. Let it ride.
4. Let it ride and protect with January 390 puts.

 

[Sancho]

145K Shares traded in the Pre-market BEFORE 08:00 hrs...

EDIT: $411.00 (08:07:54 AM)

More than three times the premarket volume of AAPL. This is a tsunami.

 

[jeewee3000]

Looking for recommendations.
Have a fair number of Jan 17 2020 calls at 350.

1. Sell now and convert to stock.
2. Roll to february.
3. Let it ride.
4. Let it ride and protect with January 390 puts.

Depends how actively you want to trade.

Had a very similar decision to make earlier this week (@ATH).

Not advice but I:
- sold calls to cover back my original investment
- put that original investment in stock
- let the others ride without protection

EDIT: This way I could forget about the whole thing. I chose this route to NOT have to make many more short term decisions like this. If we hit $430 something I'll take profits on the rest I think

 

[uselesslogin]

This is starting to feel like 2013 to me. I just remember the stock would just go up every single day. And then one day it went up a lot more after hours. I didn’t even realize it was earnings day at the time tbh. I bought the stock to support something I believe in but I held onto it thanks to the information on this board. I’m excited to see how far this breakout goes but either way I’m not going anywhere.

 

[Fact Checking]

Looking for recommendations.
Have a fair number of Jan 17 2020 calls at 350.

1. Sell now and convert to stock.
2. Roll to february.
3. Let it ride.
4. Let it ride and protect with January 390 puts.

If you worry about losing the gains to adverse news, but also have FOMO, you could follow a "constant minimum cash proportion" profit taking policy, sell contracts to convert say 25%, 33% or 50% of long option value to cash, and maintain this minimum cash percentage when the stock rises.

For example you can sell a third to cash. If TSLA rises some more then you can sell one more contract to bring cash up to 33% again, etc.

The advantages:

• Easy to follow profit taking rules,
• you will end up selling a few contracts near the top,
• if there's a bigger price correction you'll have plenty of cash to buy the dip,
• you can use limit orders in advance - this maximizes execution quality and allows the capture of fast intraday spikes,
• you'll always have 66% of your account value leveraged up if the price is rising,
• you won't end up with zero profits even in the worst case.
• you'll never sell into a drop: all profit taking is on rising prices. This helps avoid emotional trading.

The disadvantage is that you'll earn less than if you manage to time the top perfectly.

By using 25%, 33% or 50% you can adjust leverage to your own risk taking tolerance level and your cash levels, while never truly giving up the lottery ticket aspect.

This exit strategy only works if you have at least ~10 contracts though - but can be made to work with as few as 5 contracts I suspect.

 

[Runarbt]

Looking for recommendations.
Have a fair number of Jan 17 2020 calls at 350.

1. Sell now and convert to stock.
2. Roll to february.
3. Let it ride.
4. Let it ride and protect with January 390 puts.

I would consider converting half to stock during the day - let it go upwards to 420 first.
Let the rest ride until first week of January, and the roll or sell and have free cash.

Edit: Or what he said in post above ^

 

[jbcarioca]

...

S&P membership is ... possibly even a fund mandate requirement for many active investors to be able to purchase Tesla.
...

I agree with most of your post but for the quoted part above. This might conflate another very important issue that the conditions leading to S&P inclusion could also affect. That is that many institutional debt buyers (principally pension funds, insurance companies and various governmental investors) are required to meet some specific interpretations of what is called a "prudent man 'sic' rule". ['sic' because this will become 'person' sometime.] Those interpretations and/or rules usually require some period of profitable operation and also an investment-grade rating. Tesla could well achieve an investment grade rating if continuous profitability and positive cash flow coincide for some time with obvious positive outlook. If THAT happens we will see major share price escalation and more boradly based institutional holdings.

Almost all the discussion here and elsewhere is about S&P. That is indeed important. However, the catalyst for broad secular short-defying institutional holdings will be positive cash flow and positive earnings.

Ancillary but crucial points will be proof that Tesla can thrive without direct government intervention and proof that Tesla Energy has substantial broad customer appeal for residential, commercial and utility customers. These ancillary points are necessary in my opinion because the auto industry has repeatedly burned institutional investors. Huge though it is, worldwide auto industries have repeatedly been bailed out by governments trying to protect jobs, which increases risk to institutional investors.

Just consider these when thinking of how much negative institutional sentiment is driven when considering direct government intervention staving off rational business decisions for; (GM, Ford, Renault,FCA, DB, VAG etc). Then consider the effective control of; (Nissan, Toyota, Mitsubishi, Hyundai). I exclude the Chinese because their positions are generally explicit and their business models are built almost entirely on official Chinese government support.

When considering the auto industry and the public utility industry globally we see Tesla truly disrupting both. Apologies to the Christensen Disruption theorists but they really do not understand that their own auto industry analogy proves Tesla. The Models 3, Y and Cybertruck are mass market by their definitions, even though they aren't the absolute bottom of their markets in initial price but they ARE on Total Cost of Ownership. Still, Tesla Energy is absolutely the cheapest and best option for "peaker" power plants which are a much bigger market than are cars.

As that last paragraph becomes more broadly known and Tesla has consistent positive cash flow and GAAP profitability S&P inclusion will be good but dwarfed by comparison with the virtuous cycle commencing with investment grade.

Anybody wanting a long LEAP should forecast when investment grade will happen!

What will happen then? Tesla debt will suddenly become appealing to gigantic pools of funds so cost of funds will decline by probably >100 bp and inventory carrying cost will decline similarly. Thus, GAAP will rocket upwards.

 

[AlMc]

Looking for recommendations.
Have a fair number of Jan 17 2020 calls at 350.

1. Sell now and convert to stock.
2. Roll to february.
3. Let it ride.
4. Let it ride and protect with January 390 puts.

Taxable or non taxable account and how long have you had them.....

 

[theschnell]

Looks like I may need to free up some cash to contribute to the $420 limit order wall today. Did not expect it to happen this soon. Just bought a house so not much dry powder, but I’ll pick up a few. I think we all should consider picking up a few symbolic shares at $420.

 

[humbaba]

I was looking to see what the value at risk for short interest has been over time. Because Ihor's numbers are fantasy I took the last year's official short interest numbers and graphed them against share price. There's no real surprise in the comparison of the two with value at risk largely mirroring stock price in terms of direction. There is one exception: at the end of April the value at risk jumped up despite a steep decline in share price. So late April is when, broadly speaking, the shorts seriously piled on.

But what I was looking for -- was the value at risk constant -- clearly showed that it was not. It ranged from as low as $7.6B (end of January) to as high as $10.8B (mid November). That's a substantial swing in money betting against $TSLA and, at the end of November, it was at the higher end of that range: $9.5B. Of course we won't get mid December short interest for what, another week? But so far the indications (last datum, prior behavior) are that it will still be at the high end meaning minimal short covering.

Looking at the short interest got me to thinking about the "$TSLA is trailing returns of some index" line. But that is only tracking how your investment would perform if it was static and you weren't doing any trading. What if you had a buy and hold? To be fair, what if you always and only bought at arbitrary points? Using the short interest data points as the buy points I calculated what the return as a static value from the first to the last -- and that gave a 9.8% decline in value. But if you bought the same value of shares at mid and end of each month it had a return of 24.5%.

Obviously, anyone who followed the dictum of buy low, sell high would have accumulated more shares at the lows and the return would be even higher.

This second point is simply that stocks do not improve monotonically so any analysis that assumes that they do over an extended period of time (e.g., gains for the last 12 months or since start of year) is misleading, and not only for day trading. Anyone who is accumulating will have a variation from that overly simplistic metric.

 

[MartinAustin]

China registered 5,597 Tesla cars in the month of November.

Tesla Bucks China Car Slump as November Registrations Soar

This is great. I've seen more than one bear talk about the fact that car sales are down in China, BEV sales are down in China, and of course Tesla is going to be suffering as a consequence. They don't seem to figure in the possibility that BEV sales are down in China BECAUSE Tesla stopped selling its USA Model 3, pending deliveries of the MIC3. Which I believe is playing a role.

I just saw $410 holy cow!!!

 

[KarenRei]

If you worry about losing the gains, but also have FOMO, you could follow a "constant minimum cash proportion" profit taking policy, sell contracts to convert say 25%, 33% or 50% of long option value to cash, and maintain this minimum cash percentage when the stock rises.

For example you can sell a third to cash. If TSLA rises some more then you can sell one more contract to bring cash up to 33% again, etc.

The advantages:

• Easy to follow profit taking rules,
• you will end up selling a few contracts near the top,
• if there's a bigger price correction you'll have plenty of cash to buy the dip,
• you can use limit orders in advance - this maximizes execution,
• you'll always have 66% of your account value leveraged up if the price is rising,
• you won't end up with zero profits even in the worst case.

The disadvantage is that you'll earn less than if you manage to time the top perfectly.

I operate in call spreads (subpar returns in this sort of endless daily rally, but better risk management) and start rolling them around the time they go in the money (been rolling up the strikes on both ends by about $60 each time). The majority of the time I use the profit from the rolling to buy stock (e.g. profit taking / lower leverage), although occasionally I use it to buy additional spreads.

 

[Artful Dodger]

More than three times the premarket volume of AAPL. This is a tsunami.

Yes, by 6:00 am TSLA was the 2nd highest traded equity in the NASDAQ Pre-market: only the Powershares QQQ ETF was higher.

 

[Prunesquallor]

In other news, I changed my avatar - Snufkin looking a bit festive...

Me too. Getting close to end of Q4. TWO black cats are extra lucky.

 

[Dan Detweiler]

So what is max pain today ? 395 ?

I don't know...my arthritis is acting up and I have a terrible headache. Could be higher. lol

Dan

 

[anthonyj]

Those $420 shares will be worth a lot on Ebay one day

 

[humbaba]

If you worry about losing the gains to adverse news, but also have FOMO, you could follow a "constant minimum cash proportion" profit taking policy, sell contracts to convert say 25%, 33% or 50% of long option value to cash, and maintain this minimum cash percentage when the stock rises.

For example you can sell a third to cash. If TSLA rises some more then you can sell one more contract to bring cash up to 33% again, etc.

The advantages:

• Easy to follow profit taking rules,
• you will end up selling a few contracts near the top,
• if there's a bigger price correction you'll have plenty of cash to buy the dip,
• you can use limit orders in advance - this maximizes execution,
• you'll always have 66% of your account value leveraged up if the price is rising,
• you won't end up with zero profits even in the worst case.

The disadvantage is that you'll earn less than if you manage to time the top perfectly.

By using 25%, 33% or 50% you can adjust leverage to your own risk taking tolerance level and your cash levels, while never truly giving up the lottery ticket aspect.

This exit strategy only works if you have at least ~10 contracts though - but can be made to work with as few as 5 contracts I suspect.

Clear rules and, with my admittedly limited understanding of options, seems reasonable. Now if only I had the money to do that...

I see @KarenRei's post and I'm not going to argue which would be better -- but from a rule following perspective @Fact Checking's is easier.

 

[bhtooefr]

I would love to see what Tesla would do with the E-Bike designed by first principals, can guaranty you that it would look nothing like E-bikes out there today. And lawn mowers, snow blowers, power tools, the sky is the limit for Tesla new battery products. Honda is a good example (I believe they started with motorbikes) that has a wide range of offerings including vehicles.

FWIW, might be a good idea to continue the e-bike-specific parts of this discussion over here: Tesla Bike

MOD: Yes, thank you. Please.

 

[Dan Detweiler]

I would love to see what Tesla would do with the E-Bike designed by first principals, can guaranty you that it would look nothing like E-bikes out there today. And lawn mowers, snow blowers, power tools, the sky is the limit for Tesla new battery products. Honda is a good example (I believe they started with motorbikes) that has a wide range of offerings including vehicles.

Let's be clear. We would all agree that there are limitless ideas as to the implications of Tesla's battery technology. However, I think they have more than enough on their plate right now with the products they have already announced. Give it all a few years to stabilize and get about 3 or 4 more Gigafactories built. Then they can start stretching their wings a bit with product ideas.

Dan

 

[HG Wells]

Taxable or non taxable account and how long have you had them.....

Non taxable. Held far too long. More than a year.