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

[engle]

Please bear with me while I ask this totally novice question:

When discussing option contracts such as above, which of the prices are per share and which are per (100-share) contract?
I assume that the above strike prices (e.g. 500$) are for one share, but I am unsure if the associated premiums (e.g. cost basis of 22$) are also per share or per the actually traded 100-share contract (which in comparison with the strike price would drop the premium per share by a factor 100, to only 0.22$).

Apologies and Thanks in advance.

What Is an Options Contract?

Does this help?

 

[lklundin]

Well, Curt was speaking to the possibility of margin calls the next few days. I've never had one but they are a very real thing. I expect some good upside action going into the end of the year. If and when that happens, we still won't know how much of the buying was forced vs. anticipatory to preempt a margin call. And how much was new demand.

So what kind of upside move would have to happen for you to concede margin calls happened (and contributed to the strength of the move)? Because it's not public information - it's between brokers and clients. To be clear, my investment in TSLA is not predicated on margin calls or a short-squeeze. But it's pretty much an established fact that these things can and do cause more violent upside moves, particularly in exactly the kind of situation TSLA is in and has seen over the last several weeks. I would be shocked to learn that no TSLA related margin calls contributed to the buying over the last several weeks.

I can't speak to the effect on the stock price, but recent weeks have seen credible social media posts of TSLA retail short sellers being financially wiped out by margin calls.

 

[2Pearls]

This is the


i found the post from TT007, he lost 5 million? I will make sure to learn his story carefully.
Tesla Investor's General Macroeconomic / Market Discussion

As TradingInvest stated, Options are dangerous. It might look easy now as many, including myself have made money during this run, but most of the time, it is a losing game. Do we know if we have hit the top now, NO. No one knows...it is a very tough decision to make and there are so many factors that are out of your control. We have gone from about $180 to over $419 in just 6 months...if you were playing call options and buying stock, you did very well. However, if you bought stock and were playing call options at around 360 last August was it? when Elon was thinking of taking TSLA private at $420, and I was certainly one all for it, buying shares on the way up to $380+, not options luckily, but, if you were buying short term call options, you lost everything. Who would have thought it was going down as low as it did March to June?

So, this might look easy now, but learn everything you can about options, because most people lose money. If you buy stock in a company you believe in and you are LONG and it goes down, you have lost nothing if you don’t sell. I was tempted to buy options late last year especially after the 3rd and 4th Q results, but I bought stock instead, even as it was going down hoping it would turn around, and it has so far! .....now, onto $4000! Merry Christmas, Happy Chanukah and Happy New Year everyone.

 

[cliffski]

I know we have a lot of US posters here, and I know this topic was mentioned at thanksgiving, but don't forget for much of Europe (especially here in the UK), christmas is the big family meet up where people travel distances to see family. In the UK, we all hate our families and have nothing in common, so all we have to talk about was 'your journey down here'. cue lots of telling relatives how cool your new tesla is. *

*or in my case... yes its still in the garage getting it fixed after I stupidly dragged it over a kerb...

 

[ReflexFunds]

if they did that that would still be the same codebase (I am not sure you can actually scale down NN like that)

there's another sensible thing to do - you may chose to not run some of the NNs on some platforms and run all the same NNs when the functionality is shared and that would still be a plus wrt develipment time and avoiding duplication of effort and testing. And they might do it eventually but so far it was hardly observed

I agree with @Fact Checking here, it doesn't make sense to diverge the feature rollout between HW2/2.5 & HW3 if they are not actually making any use of HW3 yet. This triggers customer discontent and the need to accelerate hardware retrofits for no reason.

It is relatively simple to just scale up or down the Neural Nets to make use of a larger compute budget.

As Karpathy wrote: "If you had a C++ code and someone wanted you to make it twice as fast (at cost of performance if needed), it would be highly non-trivial to tune the system for the new spec. However, in Software 2.0 we can take our network, remove half of the channels, retrain, and there — it runs exactly at twice the speed and works a bit worse. It’s magic. Conversely, if you happen to get more data/compute, you can immediately make your program work better just by adding more channels and retraining."

You would expect the features/traffic light recognition to still work on HW2/2.5 cars, but the accuracy just is not good enough given the compute and neural net size constraints. This would be why they have not activated it and why they closed the loophole that allowed you to use it. It also makes sense that they would not even show you the visualisations on HW2/2.5 cars if they don't think they are good enough to be useful and will just lead to hundreds of youtube videos of stupid recognition errors.

Some time ago Elon mentioned working on two different potential paths for Autopilot/FSD. I can't remember the exact quote but it was something along the lines of: one is simple and one is very complicated.

I would guess the complicated path was the huge AKnet neural net with multi camera, multi frame data etc.
I guess the simple path is just scaling up the current size of each smaller neural net in the current Autopilot system to run on a 20x larger compute budget and see what you can do with the increased detection accuracy.

In R&D cars I'm sure they are still also testing AKnet variations, and possibly also starting to work on neural nets based on full 5-10 second videos feeds and imitation learning. But maybe they are thinking these will not be required until further level 9s of accuracy sometime in the future, when they have their Project Dojo in-house AI training chip finished.

 

[lklundin]

I don't use stop loss, you can see many here state it is used by manipulators to rob you of your shares.

That's one thing that I really don't like about my broker (comdirect.de), that whenever I have a buy order filled they immediately offer me a stop-loss order, to "protect me from a loss". Whenever a gullible investor takes that offer on a volatile stock like TSLA, they basically ensure a sale of their just purchased stock, with no loss (and no gain), but with two (or more?) trading commissions paid to the broker. That's a sure way to not gain anything from your investment - except to slowly transfer your money to your broker.

Or maybe I have not understood how the stop-loss order works, in which case I will gladly let myself be educated.

 

[lklundin]

Doesn't matter. Money is fungible. Every dollar they borrow in China is a dollar they don't have to earn or borrow elsewhere. IE: all of Tesla's FCF dedicated to capital investments can go to GF4/Berlin or other new projects.

The bigger question is, does Tesla attempt to move some of its China profits out of the country, or are they better spent inside China on the next product cycle (ie: Model 2/GF5)? Huge returns available in China, giant market, outstanding growth potential.

Cheers!

I think in connection with Tesla financing their various GF's with money made from already working GFs the money is not 100% fungible.

I believe for example that if Tesla wants to transfer money made in China (with GF3) to Germany (for GF4), then the Chinese would collect tax on that money - where as money earned and reinvested inside China would likely not be taxed.

If so, I would expect Tesla to spend their Chinese revenue on expansion there for as long as it makes sense, in order to not decrease their spending efficiency due to taxes.

But it's true that I know very little about (corporate) taxation.

 

[lklundin]

Ok. I will bite. What did you do to allow you to retire so early?

Follow-up question to @StealthP3D:

Why would you retire so early?

 

[jeewee3000]

We're all elated, maybe even shocked, with the recent ATH's and continued run on the stock, looks likely to continue with Q4 expected by many (not us here of course, 83k max!) record deliveries and the possibility of profits for the quarter, and MIC deliveries at the same time.

But take a step back for a moment and think about it, what's actually happening is what we've been predicting for years. Tesla has been totally misrepresented by much of the media, to the point where they thought they were going BK. For those of us following the reality, in detail, it's no surprise at all. While the bears make everyone look the other way, Tesla quietly went about its business, building capacity, pushing into new markets, iteratively improving the products and changing strategy with agility when necessary.

I think what finally exposed the emperor's new clothes has been the "Tesla killers" that have recently come to market, which have been anything but. This must have been a major WTF moment for many and forced a rethink at the status-quo and for many to take a serious look at Tesla and the reality, re-evaluate the situation and have an epiphany that all they though they knew was wrong.

So for most of the investment world this is, indeed, a big shock. For use here, it's playing-out exactly as expected.

A solid point.

To add to that, we must also realize this run-up is not the end of the bear case.

There will come a time when the mood on TMC is one of gloom and frustration, since the stock price will have dropped/have been depressed massively by some FUD-stories spinning the facts.

Therefore the above post by @2Pearls is not without truth in the sense that options are really a double-edged sword. They can make or break your bankroll. The deceased Twitter stock guru "Option Sniper" may have turned out to be a fraud, his advice regarding discipline and carefull bankroll management when trading options should be taken seriously.

Not that I want to be a Negative Nancy right now, but let us stay aware that the current state of optimism and elation is only temporary and that the war between Tesla and the short sellers is far from over. They are only regrouping.

Even the slightest doubt cast by Tesla's P&D report or ER will be (mis)used by shorts to depress the stock price. Since we are at ATH, many more than usual are willing to get out now to see if they can get back in.

When that happens, stay long, stay strong. (except if you're holding options )

 

[BenPrice]

As TradingInvest stated, Options are dangerous. It might look easy now as many, including myself have made money during this run, but most of the time, it is a losing game. Do we know if we have hit the top now, NO. No one knows...it is a very tough decision to make and there are so many factors that are out of your control. We have gone from about $180 to over $419 in just 6 months...if you were playing call options and buying stock, you did very well. However, if you bought stock and were playing call options at around 360 last August was it? when Elon was thinking of taking TSLA private at $420, and I was certainly one all for it, buying shares on the way up to $380+, not options luckily, but, if you were buying short term call options, you lost everything. Who would have thought it was going down as low as it did March to June?

So, this might look easy now, but learn everything you can about options, because most people lose money. If you buy stock in a company you believe in and you are LONG and it goes down, you have lost nothing if you don’t sell. I was tempted to buy options late last year especially after the 3rd and 4th Q results, but I bought stock instead, even as it was going down hoping it would turn around, and it has so far! .....now, onto $4000! Merry Christmas, Happy Chanukah and Happy New Year everyone.

So, during run ups I tend to buy OTM calls with the intention of flipping them for a few extra free shares. Not any substantial amount of $ - say $200-$1000 in calls. Just kinda “meh if I lose it I’m not too worried and I don’t think it will ever be in the money so I’m not worried about that aspect.

This run up...I’m unsure what to do...because the $1,000 in options is now $30,000 in options and I’m coming ITM.

They’re all Jan 17s, so I can capture the P&D report If I choose.

I never partake in options to this quantity of dollars, and I’m legit unsure what to do. Any advices?

 

[FrankSG]

Please bear with me while I ask this totally novice question:

When discussing option contracts such as above, which of the prices are per share and which are per (100-share) contract?
I assume that the above strike prices (e.g. 500$) are for one share, but I am unsure if the associated premiums (e.g. cost basis of 22$) are also per share or per the actually traded 100-share contract (which in comparison with the strike price would drop the premium per share by a factor 100, to only 0.22$).

Apologies and Thanks in advance.

The $500 is the strike price, and has nothing to do with the price of the contract.

The $500 call option contract, allows the owner to buy exactly 100 shares for $500 a share any time between now and expiration of the contract. In the US they're always for 100 shares, but I've heard that there are some for 10 shares, and even 1 share in the EU.

The cost basis of $22 I was referring to is the price of the option contract as listed on the exchange. However, this is the price per share, so the actual price of the contract is $22 x 100 = $2200.

So if you buy a $500 strike price call option @ $22, you basically pay $2200 for the option to buy 100 shares for $50.000 any time between now and expiration of the contract. So to break even those shares will have to be worth at least $52.200, or in other words the SP will have to be at least $522 upon expiration. Of course the price of the contract fluctuates daily and you may be able to sell them for a profit before expiration. Currently the Jan'22 $500 calls are trading at ~$76, so one contract is worth ~$7600.

Hope that clear everything up.

Therefore the above post by @2Pearls is not without truth in the sense that options are really a double-edged sword. They can make or break your bankroll. The deceased Twitter stock guru "Option Sniper" may have turned out to be a fraud, his advice regarding discipline and carefull bankroll management when trading options should be taken seriously.

Yeah, options are very high risk. I can imagine people being equally ecstatic one year ago from now, betting a lot on options, and then suffering big losses in the first half of 2019.

 

[JusRelax]

Driving visualization improvements not available for me on 2019.40.50.1 despite having HW3. Don't know if it's due to region (Europe), model (S) or not being a member of the early access program.

There is a setting that you need to flip somewhere in the gui... not sure where it is but that's what I heard

 

[engle]

I agree with Lycanthrope quoted below.

Additionally, numerous huge greedy global corporations desperately wanted Tesla and the transition to sustainable personal transport to fail:

1. Big Oil
2. Last Century ICE cars and trucks
3. Auto insurance companies (Warren's GEICO, etc.)
4. Hotel chains (I am going to cash out all of my Hotel REITs except those owning luxury and resorts)
5. Big Medicine, Big Pharma, Hospitals, Accident Attorneys, Death Industry, etc. (self-driving cars mostly eliminate deaths and injuries in cars)
6. The Media -- fed by #1-5 but never by Tesla since they don't need to "advertise" since owners do it on social media for free. I coin the new word, "crowdvertising" based upon crowdsourcing.
7. Wall Street (to a lesser extent firms like Goldman just wanted max TSLA volatility through their naive analyst "reports" to profit off computerized trading all the wild swings)
   
8. ... there are more but I woke up at 1 am PST so I can't think of them right now!

The U.S. Congress is controlled by large corporations and their PACs (Political Action Committees e.g. Koch Bros). Democrats vs. Republicans are like two flavors of ice cream. (Unfortunately, we don't have a multi-party system like many other first world countries with parties that really stand for something.) Very few of our congresspeople know anything about tech. They just care about holding onto their ego power trips in D.C.

Trump is a narcissistic aberrational fool loyal to these corporations and the 1%. One of his purposes is to distract the masses like the World Cup of U.S. Politics. The news media loves to hate Trump (except Rupert's Fox!) because he brings them the eyeballs and ratings.

Unfortunately for #1-#6, Tesla's vehicles proved so desirable on multiple levels that their sales grew virally to the point where Tesla is an unstoppable force for global good now. It is too late for ICE to meaningfully catch up since Tesla will always be ahead of them in certain hardware and software (key barrier to competition).

Macro factors like the rapid spread of worldwide "Climate Strike" started by Time's POTY Greta Thunberg also played right into Tesla's hands in 2019 by raising awareness of climate change. The critical boost is the S&P 500 is up ~26% in 2019 which stoked the late 2019 rally.

The U.S. stock market almost always rises in a POTUS incumbent's re-election attempt year. Unless Trump's sorry ass is unexpectedly kicked out of the WH by the crony Senate Republicans, it will almost certainly go up again in 2020. A strong macro factor for TSLA.

Prediction: TSLA $546 close 12/31/2020. (+30% above $420.69) The only qualification is if Elon decides to step back from a maturing TSLA to devote most of his time to SpaceX and/or his other ventures. He only promised to stay primarily focused on Tesla through the end of the Model 3 program at a stockholders meeting I attended several years ago. Since then, I recall he said for the indefinite future.

422.23 +3.01 (0.72%)
Pre-Market: 6:29AM EST
Squeeze some more shorts!

We're all elated, maybe even shocked, with the recent ATH's and continued run on the stock, looks likely to continue with Q4 expected by many (not us here of course, 83k max!) record deliveries and the possibility of profits for the quarter, and MIC deliveries at the same time.

But take a step back for a moment and think about it, what's actually happening is what we've been predicting for years. Tesla has been totally misrepresented by much of the media, to the point where they thought they were going BK. For those of us following the reality, in detail, it's no surprise at all. While the bears make everyone look the other way, Tesla quietly went about its business, building capacity, pushing into new markets, iteratively improving the products and changing strategy with agility when necessary.

I think what finally exposed the emperor's new clothes has been the "Tesla killers" that have recently come to market, which have been anything but. This must have been a major WTF moment for many and forced a rethink at the status-quo and for many to take a serious look at Tesla and the reality, re-evaluate the situation and have an epiphany that all they though they knew was wrong.

So for most of the investment world this is, indeed, a big shock. For use here, it's playing-out exactly as expected.

 

[FrankSG]

So, during run ups I tend to buy OTM calls with the intention of flipping them for a few extra free shares. Not any substantial amount of $ - say $200-$1000 in calls. Just kinda “meh if I lose it I’m not too worried and I don’t think it will ever be in the money so I’m not worried about that aspect.

This run up...I’m unsure what to do...because the $1,000 in options is now $30,000 in options and I’m coming ITM.

They’re all Jan 17s, so I can capture the P&D report If I choose.

I never partake in options to this quantity of dollars, and I’m legit unsure what to do. Any advices?

It's really hard for anyone to predict exact delivery numbers, as well as the market's reaction to them. Macros could also influence things. With just one month until expiration, really anything could happen.

Also, none of us know your financial situation and how much $30k is to you, so you're in the best position to decide what to do.

 

[pyromatter]

 

[BenPrice]

It's really hard for anyone to predict exact delivery numbers, as well as the market's reaction to them. Macros could also influence things. With just one month until expiration, really anything could happen.

Also, none of us know your financial situation and how much $30k is to you, so you're in the best position to decide what to do.

Going into last Friday, after what I thought would be a profit taking final week before Xmas, after the substantial run up, I sat and watched us stay green and nice volume (while still not oversold).

So I decided to sit on my hands this week.

But when I made that decision I essentially accepted being wrong meant maybe I can salvage my original $1000 or whatever and go on with life, enjoying profit from my equity.

Now I want to hold since there are only 5 1/2 or 6 1/2 trading days until P&D, depending on Jan 2 or 3. I can’t find a single data point that gives me concern over P&D, although it seems many resources have stopped providing data in recent quarters. Stuff like the attached and social media anecdotes is all I’m really DD-ing.

 

[anthonyj]

So, during run ups I tend to buy OTM calls with the intention of flipping them for a few extra free shares. Not any substantial amount of $ - say $200-$1000 in calls. Just kinda “meh if I lose it I’m not too worried and I don’t think it will ever be in the money so I’m not worried about that aspect.

This run up...I’m unsure what to do...because the $1,000 in options is now $30,000 in options and I’m coming ITM.

They’re all Jan 17s, so I can capture the P&D report If I choose.

I never partake in options to this quantity of dollars, and I’m legit unsure what to do. Any advices?

This happened to me, bought some meme calls as a joke and they all went 10-25x. I would sell some if I were you, don’t be too greedy with options. It’s a 30x gain.

 

[anthonyj]

Going into last Friday, after what I thought would be a profit taking final week before Xmas, after the substantial run up, I sat and watched us stay green and nice volume (while still not oversold).

So I decided to sit on my hands this week.

But when I made that decision I essentially accepted being wrong meant maybe I can salvage my original $1000 or whatever and go on with life, enjoying profit from my equity.

Now I want to hold since there are only 5 1/2 or 6 1/2 trading days until P&D, depending on Jan 2 or 3. I can’t find a single data point that gives me concern over P&D, although it seems many resources have stopped providing data in recent quarters. Stuff like the attached and social media anecdotes is all I’m really DD-ing.

Also people react irrationally to delivery reports. Seen it time and time again. The stock might recover after a week, but your option might not, due to its time value and IV crush. You can’t go broke by at least taking some profits off of a 30x gain

 

[wheelwhright]

After the big funding round that Rivian secured yesterday I dug a little deeper into the financial history of Rivian and Tesla. What surprised me is the massive difference in time and money it took (i.e. for Rivian will take) each of these companies to get to the first sold vehicle.

It took Tesla around 4-5 years and around 100 Million USD in financing to start producing the Roadster in 2008. 4 Years, the IPO, and another 250 Million USD investment later the Model S hit the road. (Tesla Funding Rounds | Startup Ranking)

Rivian, on the other hand, already exists for 10 years, is swimming in money now but still a year away from selling their first vehicle. They also started later - with better tech already being available.

While I like their branding and I think especially the SUV looks great, it makes my alarm bells ring when people throw extreme money at them without them having gathered real world production experience in the current team, product, and manufacturing constellation. How lofty does the valuation need to be to raise 3 Billion USD on no revenue (correct me if I am wrong)? And/Or how did the founders keep a meaningful stake in the company?

Am I missing something? Is there a way to see this in a positive light?

Really makes me appreciate how lean of a ship tesla is running. And how Elon stressed capital efficiency even after funding rounds.

 

[BenPrice]

Also people react irrationally to delivery reports. Seen it time and time again. The stock might recover after a week, but your option might not, due to its time value and IV crush. You can’t go broke by at least taking some profits off of a 30x gain

I’d did shave off 1 contract and made my AWD $2,000 faster

Maybe I could shave off a few more and give her FSD too! Will have to capital gains so maybe have to wait until Jan 1 for tax purposes.

If we can somehow bump up again at open maybe that’s what I’ll do.

Thanks for the conversation