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

[UnknownSoldier]

Furthest OTM is cheapest and the price of TSLA options is absurd. I buy furthest OTM because have you SEEN how much ATM and ITM cost? The only reason we are cleaning the MM's and Theta Gang out with these dumb OTM strikes is the stock price just keeps rocketing upward.

 

[chrsk]

2045$ in early pre market, looks like this will be yet another day without getting any work done

 

[Evoforce]

In addition to conversions of pretax IRA, 401(l), 403 (b), 457 to ROTHs (with taxes paid up front in the conversion - best from other sources of funds) there is the so called backdoor ROTH which allows you to convert after tax IRA's to ROTHs. As you get older, you will appreciate that ROTHs have no requirement for RMD's when you reach 72, and so can grow tax free for as long as you or your spouse (if you name your spouse as the primary beneficiary) live - the longest lived one. Then the next beneficiary (like your grandchild) gets another 10 years of tax free growth after the second death. Of course, if you need the money, you can always take whatever you need out (after certain lengths of time) totally tax free. I haven't researched it, but you may be able to use your ROTH as collateral against a loan, so you wouldn't necessarily have to take it out, if you can pay back the loan with other funds.

We did this in 2011 when the ROTH conversion was allowed. Both my wife and I had put away our maximum pretax savings during our working lives into 403(b) and 457 and some IRAs. We fortunately had other after tax assets that we used to pay the taxes on the conversions. Since we had been quite conservative in our investments over the years (index funds mostly) and my wife had considerably more in her account, we stayed with the index funds with her ROTH and decided to play a bit with my ROTH. We had solar panels installed on our home by Solar City in 2009, then bought our Model S in 2012 with delivery in early 2013 (we were 43XX). I saw how great the Model S was and thought about buying TSLA, but dawdled until late 2013 before sinking half of my ROTH into TSLA on a big dip (after some big FUD) and got it at 130. In early 2016 after my other half of my ROTH hadn't done much, I sold it and sunk the other half into TSLA at 190, after another dip (after some other FUD). I just left to slowly grow over the next years until I took notice of the jump over 300 and then 400 late last year. After it jumped in January, I realized I still had $1000 cash in the account. When the crisis hit and the stock plummeted below $500, I put in a buy order for 2 shares, which I got for $440 each. I now have a 15 bagger on my first half and 10 bagger on my second half and a nice more than quadrupling of my last 2 shares in 5 months. What is most remarkable is that on Monday the increase in my TSLA shares on that day was more than the total of my original ROTH balance in 2013. At 75, I haven't had to do any required minimum distributions and all the growth is tax free. If we don't have to use it and we live another 15 years, our heirs will have 25 more years of tax free growth without having to take out any money. If we have to use it, it will tax free. My wife's ROTH has grown reasonably. It started at about 2.5x as much as my ROTH. It has grown almost 70% in 7 years and now is 1/3rd the value of my ROTH.

Great story and good job!

No, do not use your Roth as collateral for a loan. If you do, all of your earning in said Roth, are then subject to taxation. Please do not do that.

 

[Criscmt]

This is idiocy. If you don't understand options well then you shouldn't be trading them at all. Paying somebody else to trade them would be madness. You would have no idea if, when they lost all your money, they were unlucky or stupid or criminal.

This whole thing is simply about fools being greedy. If you want to own a piece of Tesla, and prosper as Tesla prospers, it's pretty simple. Just buy their stock and sit on it.

I was just curious if there are such advisers at these popular brokerages.

 

[Thekiwi]

No, I'm afraid you have it wrong.

I have presented correlation between stock splits and significant outperformance relative to other, non-split stocks. (I don't care about causation v. correlation: an increased SP is a good thing, regardless of the reason.) Since you appear to have missed the links, I'll post some of them again:

Stock Splits Pay Off—on the Rare Occasions They Occur

And:

Here’s the real reason why buying a stock after it splits can be a money maker

Key point:

Since July 1996, which is how far back the NYSE’s calculations go, the index has beaten the Wilshire 5000 index W5000, +0.33% by an annualized margin of 12.1% to 9.0% (including dividends).

This market-beating performance shouldn’t come as a surprise, since a number of academic studies have reached a similar result. One of the first such studies was authored by David Ikenberry, a finance professor at the University of Colorado. Ikenberry believes the market-beating performance of stocks that have split their shares traces to a “sweet spot” in which the typical company likes to have its stock trade.

Though that sweet spot is not precisely defined, companies will not split their shares, even if the prices of those shares have risen sharply, if management believes there is a significant probability that shares of their company will fall back . . . .

And:

What Do Stock Splits Really Signal? by David L. Ikenberry, Graeme Rankine, Earl K. Stice :: SSRN

We observe significant post-split excess returns of 7.93% in the first year and 12.15% in the first three years for a sample of 1,275 two-for-one stock splits. These excess returns follow an announcement return of 3.38%, indicating that the market underreacts to split announcements. The evidence suggests that splits realign prices to a lower trading range, but managers self-select by conditioning the decision to split on expected future performance. Pre-split runup and post-split excess return are inversely related, indicating that our results are not caused by momentum.

**********
Yet you go on and on as if this is nothing.

I have asked you to either expose the methodological failings in the studies, or present sciential evidence to the contrary; you persist in failing to do so.

Thus, with no facts, your posts simply waste everyone's time.

Please, stop.

Thank you.

Did the academic studies compare the performance stocks that have split to other companies that didn't split that had similar pre-split stock performances?

It is of little surprise that stocks that split outperform the broad markets (as splits normally follow large stock price increases due to a company outperforming, so it wouldn't be a surprise for the company to continue outperforming in future). It would however be very surprising if two nearly identical performing companies had noticeable difference in stock price returns if one split and the other didn't.

 

[stef]

I am watching the lakers beat the Blazers. An e-tron commercial just had a kid sitting in the backseat as mommy turned on the car. And the kid looked like they were in the SpaceX Dragon...coincidence?
2019 Audi e-tron TV Commercial, 'The Next Frontier of Electric' [T1]
Not their first etron astronaut commercial

There you go, confirmation that Audi is at least 6 years behind Tesla.
And this was one of the first fan made Tesla commercial... zero money spent

I prefer the original but ... well copied Audi!

 

[astrotoy]

Great story and good job!

No, do not use your Roth as collateral for a loan. If you do, all of your earning in said Roth, are then subject to taxation. Please do not do that.

Thanks, much appreciated.

 

[Lessmog]

So many Trappist beers...

Not, that's beer traps. Or similar.

 

[FrankSG]

Frankfurt update right before US pre-market opens:

EDIT: Now €1,725.20 => $2,043.15

 

[aubreymcfato]

Gosh, it's 10 am and I thirsty as hell, thanks to you.
If my favourite publican is on the right mood, tonight's gonna be a Cantillon Fou'Foune or - lo and behold! - a
Cantillon Don Quijote (he has the only bottles left in the world... and they are not for sale).
Cantillon Don Quijote - Lambic.Info

 

[Lycanthrope]

View attachment 578813 Cheers to the longs on a wonderful day!

@Lycanthrope I see your Belgian "pool beer" and raise you one of my 2017 Westvleteren XII's from my cellar

Good choice, sir! Haven't tasted it myself since, oooooo, 2004, or something like that. Need to try it again - of course you need to book with the abbey direct now and take the car, with your licence-plate recorded, etc. The up-side is that you pay €2 per bottle, not €12 like they charge in the specialist shops...

I didn't posts any beers yesterday, but you can find them all here: https://twitter.com/AskDrStupid/status/1296512497193820160

It was a glorious day...

 

[FrankSG]

Frankfurt update right before US pre-market opens:

View attachment 578906

EDIT: Now €1,725.20 => $2,043.15

Carrying over to the US so far:

New ATH of $2,041.75.

EDIT: Trending a bit lower now towards $2,020 in the minutes since I posted this.

 

[Lycanthrope]

Frankfurt update right before US pre-market opens:

View attachment 578906

EDIT: Now €1,725.20 => $2,043.15

And as if by magic, the shopkeeper appeared (only old UK folks will get that reference...)

 

[Lycanthrope]

Including Green Pete.

I hope some of you also took me up on my "not advice" for june 2022 1500 strike when they were 36 bucks in March.

Yeah, I bought 10x Jun 2022 c1400's in the C19 dip, but sold a few weeks later for 3x on the fear of a 2nd dip. Otherwise I would have het them.

Still, my trading portfolio is up 200x from last September, $3.5k -> $700k, and you are one of the main reasons for that.

I think I've thanked you several times already, but here I got a gain, tusind tak!

(a bit of Danish there - and don't forget that beer when you're passing Brussels...)

 

[vikings123]

Good morning. The bid prices are slowly climbing up. Max pain should not matter but it is monthly options expiry day so I’m expecting some shenanigans. We will see...

 

[Lycanthrope]

I watched the Jim Cramer Rob Mauer interview last night. I think it served a couple of very useful purposes. First, it got Rob exposure to Jim's very large audience of followers, since Cramer featured the interview on his website. This means that many more people will understand how little almost all of the analysts they see and hear on CNBC and other places really know about Tesla and that someone like Rob and a fair number of people on TMC really do know and understand Tesla. The fact that Cramer ended up interviewing Rob was quite the sight to behold. Second, it may move some of Cramer's audience to also include Rob's Tesla Daily podcast in their listening. Great job by Rob.

I watched it too and my take-away is that Rob schooled Jim on a number of key subjects, plus elements from his bull thesis. Jim came away impressed, dramatically more educated on Tesla, and a more bullish, but this time with a rational floor underneath it, rather than just "lots of friends have Teslas and I was told they could raise $2b in a click of the fingers".

I know Jim isn't appreciated by everyone, but he's influential to the CNBC crowd and having him on our side is a huge positive.

 

[Lycanthrope]

Options strikes with better returns, higher leverage?

This might not be the best forum to ask this question.
However, I believe many here might have a good answer to this.

It appears many go for "lottos" through strikes furthest OTM. @Lycanthrope ?
I believe that's for high leverage.
Anyhow, whether anyone here does that or not, I have been doing this

I was of the view that for a given expiry date, theoretically the leverage is higher for higher strike contracts.
Leverage is ratio of contract-price-percent-change / share-price-percent-change.

Let's take options expiring in September-2021, strikes 2000 and 2400.
The contract prices of each of these compared to their prices the previous day should've grown unevenly. 2400 should have grown at a higher %.
However, I noticed that the contract price for strike $2000 had higher returns than for the contract price of 2400.
Today, 08/20, 2000 strike grew by ~16%, 2400 strike grew by 13.3%.

One explanation I can think of is the % change on the brokerage page likely is comparison between the last sold price at yesterday's close with last sold price at today's close.
I plan to track the bid/ask at closing time for a few days and see if this is the case. Assess the % changes through mid point at closing time.

Do mid-point (bid/ask) price changes not follow this lower/higher leverage pattern? That is, mid-point for 2700 strike not expected to grow faster in % points, than that of 2000 strike?

I keep getting pinged on options trading, probably just because I talk about my trades a bit, but it's easy to make tons of money on options when the stock price rises 10% every other day. So I think my success is mostly down to luck, there's no method other than picking what I think feels right.

The only scenario where I would strongly recommend LEAPS, would be when we get massive dips and crushed IV. So the post 19Q1 situation, the C19 dip, this is the time to load on the farthest-out LEAPS you can buy, preferable those at a strike close to previous ATH. I prefer my LEAPS to go DITM, far less risk over time.

I rarely buy lottery weeklies, mainly because I've lost my premium 9/10 times. Exceptions to this can be weeks like we have now - I'm thinking to get a few $2100 strikes for this, next, weeks after - will see how the premiums look when we open, might be too expensive. I've $40k cash sitting there doing nothing from the 4/9 c1500 I sold yesterday morning, thinking we were getting a pull-back - still it was 2x the money from when I bought last Friday for $20k, and that was from 2x 14/8 c1545, which cost $13.4k and were totally worthless before the split was announced, 10,000% rise after that - imagine if people had bought them fresh on that Tuesday...

So if you're playing cheap lottos, be prepared to lose the premium. If you play with serious money, be prepared for bad sleep, and lose your money.

Like I said, it's easy right now with the run-ups we've had, don't assume this will continue for ever.

 

[Robertj]

Similar to L , I started buying shares at $80 , got sucked to options and lost money for 5 years taking short term options
( less than 6 months)
With little capital left then
In the last 12 months I have played out of the money leaps , buying leaps at lows , converting to shares as we reach
new highs
This has paid off spectacularly, knowledge , timing , luck have come together
Best wishes to all but be careful ,

 

[charlesgres]

Options strikes with better returns, higher leverage?

This might not be the best forum to ask this question.
However, I believe many here might have a good answer to this.

It appears many go for "lottos" through strikes furthest OTM. @Lycanthrope ?
I believe that's for high leverage.
Anyhow, whether anyone here does that or not, I have been doing this

I was of the view that for a given expiry date, theoretically the leverage is higher for higher strike contracts.
Leverage is ratio of contract-price-percent-change / share-price-percent-change.

Let's take options expiring in September-2021, strikes 2000 and 2400.
The contract prices of each of these compared to their prices the previous day should've grown unevenly. 2400 should have grown at a higher %.
However, I noticed that the contract price for strike $2000 had higher returns than for the contract price of 2400.
Today, 08/20, 2000 strike grew by ~16%, 2400 strike grew by 13.3%.

One explanation I can think of is the % change on the brokerage page likely is comparison between the last sold price at yesterday's close with last sold price at today's close.
I plan to track the bid/ask at closing time for a few days and see if this is the case. Assess the % changes through mid point at closing time.

Do mid-point (bid/ask) price changes not follow this lower/higher leverage pattern? That is, mid-point for 2700 strike not expected to grow faster in % points, than that of 2000 strike?

That's my strategy as well.. I buy the higher strikes for a higher leverage (because they are cheaper and so the delta gain is percentually higher), and when the SP approaches the strike price, I roll up to a higher strike, and when expiry approaches I roll up and out to avoid the theta decay..

If you buy a leap ITM that you hold for a long time, the percentual gain can be visibly very high, but the gain can be much higher with continuously rolling up OTM's.. it's just a lot less visible in your portfolio items..

I prefer OTM's 9 months out.. shorter expiries are riskier, longer expiries have less leverage..

Edit: strategy works (so far) for stocks you are sure of that will go up in value significantly over said period, like TSLA or AAPL.. May not work for other stocks..

 

[Thekiwi]

remember a week ago when many thought Tesla being setup to be $420 post split was a joke?