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

[KarenRei]

Hey all, I’ve been enjoying this thread with great interest for the past few weeks, and I don’t think I have been on TMC so obsessively since late 2012, when we were all going bonkers over seeing any new pictures or videos of everyone’s newly delivered Model S, in all their glorious original colors.

Anyway, I’m looking for strategy advice on playing options. I’m already long with shares, and plan to hold them until we see Cathie Wood’s bull case realized. I believe that Q1 earnings could be a positive surprise, and that Investor Day and Battery Day could cause major SP increases, propelling us forward to the 4000 or 7000 SP that we are all hoping for in the next few years. Yet with such a large run-up in recent weeks, it is likely a bad time to jump into options, as their prices are likely inflated.

Given all this, what strategy should I pursue? Buy deep OTM calls way out in the future (21/22), to try to capture the next jump to 2000 and beyond? Buy OTM calls with six month expirations, every six months? Buy short term OTM lottery ticket calls just before these upcoming events? How deep OTM to go with this, 1200/1500/1800? Or do either of the above with ATM or near-ATM calls? Wait a few months and hope the SP stabilizes and option prices come down as IV drops? Or just buy more shares and be patient, and forego the extra profit potential built into the leverage of the options?

Would love to hear your thoughts on strategies here.

The sooner expiry, the more profit you stand to make, but the less time you have to recover from a downturn (assuming we're talking about holding onto contracts rather than constantly rebalancing to maintain a desired delta/theta ). I personally like to have expiry at least a year out, but not vastly over a year; I figure that leaves time to recover from even quite bad news.

I buy OTM call spreads, with the bottom of the spreads several tens of % higher than the current stock price, and the top of the spreads many tens of % higher than the current stock price. I roll when the bottom of the spreads gets close to or past the current stock price.

I maintain a balance of stock and options, decreasing leverage as the price rises and increasing it as the price falls, but trying to ensure that I don't underestimate how far the price could fall in terms of leverage increases.

I'll occasionally buy a couple lottery tickets, but not often.

 

[Lessmog]

View attachment 514368

birds aren't real​

and U aint drvin

 

[gerebgraus]

You have to distinguish between TSLA stock versus TSLA options. Your reasons might work with the investment of the stock, but doesn't apply with the options - which is why I agree with Hock1.

With IV as high as it is now, the stock will have to continue on a parabolic rate for any options to yield the same amount of gains that the past few months have provided. The past 2 weeks seem to show a more linear SP increase, so the chances of getting a 100+% return after a week or two are pretty much done, until IV drops to more reasonable levels.

Time value is never an option holder's friend.

We agree that return on options because of the increased IV must be much less in the future. In fact, I am pretty sure I was the first that have pointed this out in the forum. On the other hand the claim that you cannot expect better return on options in the future than from stock because of that has no foundation. So I am not sure what are you disagreeing with, but You seem to claim that option buying cannot be a rational decision to anybody is faulty. Time is not your friend in option and IV is not your friend but you need to calculate the pros and cons for all investments including options. And there might be pros that might just make options better value for some today than stocks.

 

[Highway2Heel]

Hey guys, just realized I missed the 7 year anniversary of my own awakening to Tesla & Musk.

Automobile Data Surveillance and the Future of Black Boxes - Schneier on Security​

Sec-tech-boffin Bruce Schneier slipped out a blog post contemplating how Tesla can use a car's log to put the lie to Mega Media Moguls doing Evil Work. Musk's strong rebuttal to John Broder of New York Times for his deliberate sabotage of a test loaner made me curious, and around the same period he slid out his famous Trilogy in Five Parts, including the April 1 hint of Positive Cash Flow. So I researched how to invest in that person and his company. Now very glad I did, at $51 to begin with -- last close was 901, right?

Here's a snippet of that piece:

Tesla Motors gave one of its electric cars to John Broder, a very outspoken electric-car skeptic from the New York Times, for a test drive. After a negative review, Tesla revealed that it logged a dizzying amount of data from that test drive. The company then matched the reporter's claims against its logs and published a rebuttal. Broder rebutted the rebuttal, and others have tried to figure out who is lying and who is not.

What's interesting to me is the sheer amount of data Tesla Motors automatically collected about the test drive. From the rebuttal:

After a negative experience several years ago with Top Gear, a popular automotive show, where they pretended that our car ran out of energy and had to be pushed back to the garage, we always carefully data log media drives.​

Read the article to see what they logged: power consumption, speed, ambient temperature, control settings, location, and so on.​

NYT issued an "apology" but kicked Broder upwards to a more senior position, in the editorial board IIRC.

I remember that well. My first purchase was early in 2013 but it wasn’t stock. I didn’t have a lot of money then. I’d been burned pretty good by the great AAPL descent. So, I bought seven October 2013 $40 call strikes when the price of the stock was around $33. After the skyrocket ride, when TSLA announced its first profit, I sold one option to recover my initial investment and then rode the other 6 out through the expiration date.

 

[Artful Dodger]

Any particular reason why? What did I miss?

Predictions from @Unpilot for the last 11 Sundays?

Cheers!

 

[JakeP]

The sooner expiry, the more profit you stand to make, but the less time you have to recover from a downturn (assuming we're talking about holding onto contracts rather than constantly rebalancing to maintain a desired delta/theta ). I personally like to have expiry at least a year out, but not vastly over a year; I figure that leaves time to recover from even quite bad news.

I buy OTM call spreads, with the bottom of the spreads several tens of % higher than the current stock price, and the top of the spreads many tens of % higher than the current stock price. I roll when the bottom of the spreads gets close to or past the current stock price.

I maintain a balance of stock and options, decreasing leverage as the price rises and increasing it as the price falls, but trying to ensure that I don't underestimate how far the price could fall in terms of leverage increases.

I'll occasionally buy a couple lottery tickets, but not often.

Thanks KarenRei, this is very helpful and insightful, particularly the bits about how to structure the spread, which nicely answers my question about strike targets. Rather than get hung up on choosing a single strike price, the spread lets me span the entire range I was targeting (say 30% - 90% above SP, which matches your targets).

OT question for you that I have been meaning to send via PM: have you considered blight-resistant American Chestnut (Castanea dentata) for your reforestation efforts? It is being used here in PA and West Virginia to replant on strip-mined mountaintops, as it can grow in rocky soil, and is a very fast growing tree. I’m not sure if it exists in Iceland or how it would respond to volcanic soils, but I know it grows at least as far up as Nova Scotia and PEI.

 

[MC3OZ]

Why are we transitioning from a conversation about graphene into one about solid state cells (another relatively overhyped tech)?

Solid state cell = you're trying to let lithium ions diffuse through a piece of glass as quickly and easily as they can through a liquid, and have the piece of glass as thoroughly contact the active materials of the anode and cathode as a liquid would contact them, in order to be immune from dendrites in lithium metal anodes, except that A) in practice they're often not always immune to dendrites, B) dendrites are not the big problem you have to tackle (disjoint pieces of Li metal surrounded by a SEI is the bigger challenge... e.g. coloumbic efficiency has to be exceedingly high), and C) there's been huge progress in suppressing dendrites via electrolyte changes in the past year regardless.

Well said....

For the battery Investor Day, I expect the combination of Maxwell/Dahn tech to provide improvements in :-

• Energy Density
• Fast Charging
• Longevity
• Cost.

Note increase longevity should also mean reduced chance of battery fires.

Drew mentioned cost several times in the shareholders meeting, for entry level Evs and energy storage cost is by the most important metric.

Perhaps Tesla has a zero Cobalt chemistry for energy storage and entry levels EVs and a chemistry containing some Cobalt for Performance Evs or perhaps a single chemistry can do the whole job.

While Grahpene/Solid state might be able to out perform Maxwell/Dahn in some metric in 5 years time, cost is the the hardest hurdle to clear..

We can also bet Tesla will have something better in 5 years time, Maxwell provides the opportunity to reevaluate existing chemistry and try new chemistries, the Dahn team is very good at testing chemistries

I would like to get rid of cooling tubes, these tripped up the Model 3 ramp and caused no end of grief, Yes a pack needs thermal management, but there might be better ways of doing it...

I'm even more agnostic on form factor than I am on chemistry...

What we want is the chemistry/form factor combination that does the best job today, and that might be something different in 5 years time...

The big opportunity is the next 5 years, timing matters, and Tesla seems poised to deliver at the right time.,...

 

[Artful Dodger]

You can't? Doesn't insider trading only apply only if you're a company officer?

https://www.sec.gov/Archives/edgar/data/25743/000138713113000737/ex14_02.htm

"Consequently, an "insider" can include officers, directors, major stockholders and employees of an entity whose securities are publicly traded."​

Besides, how can @KarenRei spend her time babysitting us if she has to babysit actual CUSTOMERS?! ... dinna thin of dat, did ye?

Cheers!

 

[Unpilot]

Crystal ball says ignition is a GO!

 

[Highway2Heel]

Seriously....once we break $937.xx....more or less....it’s ON...

 

[UnknownSoldier]

Hey all, I’ve been enjoying this thread with great interest for the past few weeks, and I don’t think I have been on TMC so obsessively since late 2012, when we were all going bonkers over seeing any new pictures or videos of everyone’s newly delivered Model S, in all their glorious original colors.

Anyway, I’m looking for strategy advice on playing options. I’m already long with shares, and plan to hold them until we see Cathie Wood’s bull case realized. I believe that Q1 earnings could be a positive surprise, and that Investor Day and Battery Day could cause major SP increases, propelling us forward to the 4000 or 7000 SP that we are all hoping for in the next few years. Yet with such a large run-up in recent weeks, it is likely a bad time to jump into options, as their prices are likely inflated.

Given all this, what strategy should I pursue? Buy deep OTM calls way out in the future (21/22), to try to capture the next jump to 2000 and beyond? Buy OTM calls with six month expirations, every six months? Buy short term OTM lottery ticket calls just before these upcoming events? How deep OTM to go with this, 1200/1500/1800? Or do either of the above with ATM or near-ATM calls? Wait a few months and hope the SP stabilizes and option prices come down as IV drops? Or just buy more shares and be patient, and forego the extra profit potential built into the leverage of the options?

Would love to hear your thoughts on strategies here.

I have 1/2021 $1880C. You don't need to make it to ITM to make money, especially with long expiration dates. You just need it to go up quite a bit before expiration. Theta is hugely in your favor with LEAP's and if you are very bullish you can make big money even though it's still far OTM when you finally sell. Obviously you won't hold something like this to expiration because it will be worthless unless TSLA actually reached $1880 a share but if it did then we're all going to be multi-millionaires anyways so it would be a nice problem to have.

 

[ZeApelido]

Overall market sentiment questions later this year: If Bernard Sanders is elected president, will big investors pull their money out of the stock markets?

If so, will just the decent chance of him getting elected start a drop? Could we some effect of this across the market as early as March, if it becomes clear he will be the nominee?

For the record I would support his candicacy, and long term pro environment should be good for Tesla, but I have concerns that this may have some negative effect in the next 9 months.

 

[elasalle]

This showing up in CNBC

 

[UnknownSoldier]

Overall market sentiment questions later this year: If Bernard Sanders is elected president, will big investors pull their money out of the stock markets?

If so, will just the decent chance of him getting elected start a drop? Could we some effect of this across the market as early as March, if it becomes clear he will be the nominee?

For the record I would support his candicacy, and long term pro environment should be good for Tesla, but I have concerns that this may have some negative effect in the next 9 months.

There might be short-term market shocks if Bernie is elected but in the long run if he actually gets wealth transferred away from the 1% to the 99% it's going to be a big driver of the economy because when poor and middle class people aren't living paycheck to paycheck and have money to spend, they will spend it and that boosts the economy. Everyone knows the 1% hoards money instead of spending it, so giving money to the 99% will always improve overall economic performance.

I'm also a Bernie supporter, going back to 2016 when I supported him instead of Hillary FWTW

 

[Lessmog]

Overall market sentiment questions later this year: If Bernard Sanders is elected president, will big investors pull their money out of the stock markets?

If so, will just the decent chance of him getting elected start a drop? Could we some effect of this across the market as early as March, if it becomes clear he will be the nominee?

For the record I would support his candicacy, and long term pro environment should be good for Tesla, but I have concerns that this may have some negative effect in the next 9 months.

Ask me next year?

 

[dc_h]

Later this year we need to loudly publicize the difference between the reality of Tesla in China and what Jonas projected. He could not have been more wrong, with a very specific forecast only a year out. It's time for his credibility to be shredded in every corner of the investment community. Jonas needs a new line of work.

On a scale of 10 to 500 I’d give Adam Jonas a 9.

 

[elasalle]

There might be short-term market shocks if Bernie is elected but in the long run if he actually gets wealth transferred away from the 1% to the 99% it's going to be a big driver of the economy because when poor and middle class people aren't living paycheck to paycheck and have money to spend, they will spend it and that boosts the economy. Everyone knows the 1% hoards money instead of spending it, so giving money to the 99% will always improve overall economic performance.

I'm also a Bernie supporter, going back to 2016 when I supported him instead of Hillary FWTW

Green Deal means at least neutral for EV/Renewables ...

 

[eloder]

Overall market sentiment questions later this year: If Bernard Sanders is elected president, will big investors pull their money out of the stock markets?

If so, will just the decent chance of him getting elected start a drop? Could we some effect of this across the market as early as March, if it becomes clear he will be the nominee?

For the record I would support his candicacy, and long term pro environment should be good for Tesla, but I have concerns that this may have some negative effect in the next 9 months.

This market has a lot of pumping in general that any end to the Trump presidency will cause a drop. Extended QE, heavy corporate tax cuts, and soon-to-expire personal tax cuts for wealthy individuals are likely all candidates to be reversed with the blue wave.

I think TSLA will still fair decently well in such an environment though. It has so much momentum and opportunity ahead of it for the next few years. Plus its normal volatility alone means it'll go through 50% drops even without recessions, due to the FUD and short sellers out there. I'll be prepping my non-TSLA portfolios for such an event, but TSLA will probably be left alone.

The market will also realize that a heavily progressive congress would translate into far more opportunity for TSLA and other renewable-focused companies. Bernie's green new deal is *massive* if congress had a realistic chance of passing anything remotely close to it for TSLA and other green companies.

 

[ggr]

I don't know about Tesla specifically, but most companies in Silicon Valley (style) allow you to buy and sell stock in the company, relying on you not to trade on any kind of insider knowledge. However you're not allowed to sell short or trade in derivatives.

 

[SarahsDad]

How well predictions turn out says a lot about an analyst.

Here’s Cathie Wood from early February predicting 1.1M vehicles in 2020, with a $300B market cap.

Did I mention this was from February 2015!

Hilarious how the CNBC regulars tried to belittle her, practically laughed her off the set. She is one tough cookie, and damn prescient.

Tesla, the Apple of autos: Pro

Cathie Wood, in CNBC interview, thinks 1.1m units possible by 2020