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

[Criscmt]

Why not do both? I sold a call to write some puts and I am also going to write some call in my after-tax account hopefully to cover exercising some options.

Wrote a call at way OTM, and used the premium for selling cash covered puts?
Can you share the strikes and expiry dates?

 

[Criscmt]

Okay, now we know more. After going up 49% in the eight trading sessions after the announcement of the split, this week TSLA went up 8% in five trading sessions. I'd call that a win on my prediction of a continued rise, but comparatively muted.

As to my worry (not prediction) that TSLA may be down hard Friday towards the end of the day, I'd say it didn't really come to pass. It certainly hit an all-time high early and never regained those heights, and it ended down some, but at this level closing a little over 100 points below the high and only about 1% for the day can't be characterized as "down hard".

And one more prediction to go for next week. I wrote "And then the next week will be down, maybe one third of what the final split rise turns out to be after the coming week." The final rise in TSLA since the split is 1,374.39 -> 2,213.40, which is about 839 (more than I expected). One third of that is 280. Translating to our new post-split prices, my prediction was that TSLA will be down from 442.68 by maybe about 56, so down to around 390 (1950 currently) for the week.

Given that I have still heard no reason why a fundamentally meaningless split seemed to cause this massive stock price rise, I have to conclude that shorts got scared for some reason but that they'll be back in force. So yeah, I still think we'll be substantially down next week. But I suspect we'll be up first on Monday morning unless macros get in the way. And I don't plan to do any trading next week since I feel I don't understand things at all. This is not a strongly held belief, and I have done nothing to reduce or hedge my long calls. Maybe do some of that Monday if TSLA is indeed up some. If we are down that much next week it will certainly hurt. And it continues to be the case that "Of course all bets are off if S&P 500 inclusion is announced." But at this point I agree that it seems likely this won't happen until rebalancing happens, which is later.

As to my success in writing short-term puts, the $175K win from Wednesday was the big one. I also made another $58K from letting the 2180 puts I wrote yesterday expire worthless. In addition I did a day trade (rather unusual for me, and I didn't mean it to be). With TSLA at 2283 this morning I wrote 10 8/28 2225 puts for $11.80, thinking that they would likely expire worthless. They didn't, but I closed out the position in the last few seconds for $10, so I made $1.8K. If I didn't get my price I would have been okay with having the 1000 shares put to me at 2225, and likely selling them on Monday for a profit, probably more than I made this way. Either that or expiring worthless would not have technically counted as a day trade.

Do you anticipate IV crush next week?

 

[UnknownSoldier]

This Neuralink stuff is wild. I mean at this point they are shooting for the goal of taking signals emitted from the brain which are occluded by a gap (spine damage, such as in paraplegics and quadriplegics) and implanting multiple devices and using taking a signal, translating it, transmitting it across the gap, and replaying the signal with the goal of giving the paralyzed person the ability to move naturally again.

This doesn't sound very complex at the start, but it lays the groundwork for everything else that might happen when you have a chip in your skull which can directly interface with and read and write neural signals. In 20-30 years who knows, Sword Art Online might actually be possible!

P.S. Maybe we need a Neuralink subforum here. Mods?

 

[ggr]

This Neuralink stuff is wild. I mean at this point they are shooting for the goal of taking signals emitted from the brain which are occluded by a gap (spine damage, such as in paraplegics and quadriplegics) and implanting multiple devices and using taking a signal, translating it, transmitting it across the gap, and replaying the signal with the goal of giving the paralyzed person the ability to move naturally again.

This doesn't sound very complex at the start, but it lays the groundwork for everything else that might happen when you have a chip in your skull which can directly interface with and read and write neural signals. In 20-30 years who knows, Sword Art Online might actually be possible!

P.S. Maybe we need a Neuralink subforum here. Mods?

It has no revenue and you can't invest. So there's no reason to have it here. There is already such a thread:
The Neuralink Master Thread

 

[OrthoSurg]

I believe $6800ish was a base case. The bull case was $15,000 by 2024. This is why I won’t sell anytime soon.

When you listen to Cathy Wood, you can’t sell

 

[scaesare]

Please... that man had a family.

I've explained to my wife why I've been preoccupied all day....

 

[Hock1]

I have never considered writing calls or puts because of the increased risk associated. But giving the upcoming 5:1 split and the fact this forum is very bullish I am surprised how much I hear about people writing covered calls but not about writing puts. With the split bringing the cost of a put being exercised to ~400x100 or $40,000k could someone advise as to why as a Tesla bull writing a put would be a bad idea. If it's not exercised you get to keep the premium. If it is exercised you have to buy TSLA, and if you believe the long term thesis you would be happy to do so any way. Is there a downside to this idea that I am not thinking about properly?

You could in theory write one weekly put a week and pull in maybe 1,000 dollars a week or so, and if you are forced to buy, you are buying something you believe has long term value otherwise.

I personally won't do this until next year if I do for various tax reasons, but I was curious on other peoples takes.

The biggest potential problem with writing a put for a very volatile stock in a volatile market is this: If you say to yourself "I'd be glad to be forced to but TSLA at $X" and a black (or even a gray) swan event happens, the stock may gap down to X-$50 or $100 or whatever and you are assigned to buy at X.

 

[[email protected]]

Macros: the facts seem to confirm Tony Seba's prediction of the rapidity of EV adoption so far: here is a recent (COVID 19) talk:

He makes a compelling case for log scale adoption. Cathie Wood makes a good argument for TSLA's outsize share of that adoption in the near term (and the major manufacturers seem to have conceded the future to TSLA with a whimper, not a bang) It seems like Tesla is executing flawlessly (what does the Shanghai design/build team do now?? Next Giga, please) Congrats to all and so nice that on Monday, the opportunity will be within reach for many more...

 

[OrthoSurg]

Macros: the facts seem to confirm Tony Seba's prediction of the rapidity of EV adoption so far: here is a recent (COVID 19) talk:

He makes a compelling case for log scale adoption. Cathie Wood makes a good argument for TSLA's outsize share of that adoption in the near term (and the major manufacturers seem to have conceded the future to TSLA with a whimper, not a bang) It seems like Tesla is executing flawlessly (what does the Shanghai design/build team do now?? Next Giga, please) Congrats to all and so nice that on Monday, the opportunity will be within reach for many more...

Monday is the start of the race to the Trillion dollar valuation.
2022?
2023?

 

[Artful Dodger]

When you listen to Cathy Wood, you can’t sell

No but she can. ARK Invest are swing traders. Their product is ARKW and it's siblings. They promote Tesla to sell shares in their funds. That's it.

Anybody care to tally up how much further ahead ARK Invest would be if they didn't sell their TSLA? Please don't feed me their 10% limit b.s. That's for adding more shares. No such rule for holding. They just like to attract money with there 'outsized' gains compared to the S&P 500. 17% now? 20%? Wot?

My TSLA is up 900% in the past year. So would be their's if they weren't swing trading. Bottom line, is they make money on the management fees they charge their investors, not on profits from stock gains. Those go to the investors (LESS the fees, or course) but always watered down by selling their winners.

It took me a long time to understand the ARK Invest business model until it was explained simply by Dave Lee in this video:

Simply put, ARK Invest doesn't make it profits from its investments (those are assets under management, so the profits don't belong to them). ARK Invest makes its profits from the management fees. That's why they swing trade, to attract more investors with what looks like outsized returns.

Until you compare those returns to NOT selling.

 

[FrankSG]

That appears to be a multi-leg trade:

View attachment 581708

According to options profit calculator, this looks like a substantial bet the price will drop:

TSLA Calendar Spread calculator

Entry cost: $1,094,400.00 (net debit)
Maximum risk: infinite on upside
Maximum return: $500,505,372.00 at a price of $0.00 at expiry
Breakevens at expiry: $2115.20

Couldn't it just as easily be the opposite? Sold calls and bought puts? Or an iron condor, or a straddle?

What makes you say the trader must've gone short calls and long puts?

 

[FrankSG]

Wh


Anyone here buy any TSLA in the teens? 20's are my cheapest shares.

I'm working on it, although I'm not sure I'll get there.

Even though the cheapest TSLA shares I ever bought were ~$180, and most of my shares were bought in the $200s and $300s, if I converted all my options to shares today, my cost basis on my entire TSLA stock position would be $31, and I think I'll get it down to $25-30 this year, if we get close to a post-split share price of $600.

It's unlikely there will be similar returns on TSLA options as we've seen over the past year ever again, so I'm not sure I'll ever get my cost basis down to the teens. Besides, there's a chance some option trades go wrong as well. But there should still be a solid decade of TSLA stock appreciation ahead of us, so maybe I'll get it down to the teens at some point through a few more options trades.

It'd be pretty cool to be able to get my cost basis down to IPO price, even though I was never able to buy during that period. It's not a goal per se, because it'd be a stupidly arbitrary goal to have, but if I do happen to get there, it'd be really cool

 

[RobStark]

Macros: the facts seem to confirm Tony Seba's prediction of the rapidity of EV adoption so far: here is a recent (COVID 19) talk:

He makes a compelling case for log scale adoption. Cathie Wood makes a good argument for TSLA's outsize share of that adoption in the near term (and the major manufacturers seem to have conceded the future to TSLA with a whimper, not a bang) It seems like Tesla is executing flawlessly (what does the Shanghai design/build team do now?? Next Giga, please) Congrats to all and so nice that on Monday, the opportunity will be within reach for many more...

Didn't Seba say that all new car sales would be electric by 2025?

New car sales would have to collapse for the EV supply chain to make enough BEVs .

 

[Sanny]

Also that. It's 1.5 years salary for her. The big issue is that she can't trust her husband.

Fascinating that a doctor earns that much. Still cannot adjust - different culture, in my childhood the doctors were those saint people that helped others for a very below average wages.

 

[MP3Mike]

No but she can. ARK Invest are swing traders. Their product is ARKW and it's siblings. They promote Tesla to sell shares in their funds. That's it.

Anybody care to tally up how much further ahead ARK Invest would be if they didn't sell their TSLA? Please don't feed me their 10% limit b.s. That's for adding more shares. No such rule for holding. They just like to attract money with there 'outsized' gains compared to the S&P 500. 17% now? 20%? Wot?

It is more about being actively managed and selling winners to buy up-and-coming winners. They are performing better than that, YTD is currently ~81%. (While S&P is only ~10%.)

The other advantage to them is that people, like me, can invest in the ARK Innovation fund in their 403b/457b where they can't invest in TSLA directly. I could invest in BPTRX instead, which has 2x the TSLA exposure and higher fees, but it has only done ~78% YTD.

Yes, TSLA has done ~430% YTD so it has done way better, but if you look at the 5-year numbers you see the difference isn't quite so big:

TSLA: 54%
ARKK: 37%
BPTRX: 27%

So yes, holding would have been better for now, but come back in 5 years and the story could be significantly different. (Yeah, with Tesla being what it is you would probably still be ahead with TSLA instead of a fund.) But hey it also gives me some diversification.

 

[Bet TSLA]

No but she can. ARK Invest are swing traders. Their product is ARKW and it's siblings. They promote Tesla to sell shares in their funds. That's it.

Anybody care to tally up how much further ahead ARK Invest would be if they didn't sell their TSLA? Please don't feed me their 10% limit b.s. That's for adding more shares. No such rule for holding. They just like to attract money with there 'outsized' gains compared to the S&P 500. 17% now? 20%? Wot?

My TSLA is up 900% in the past year. So would be their's if they weren't swing trading. Bottom line, is they make money on the management fees they charge their investors, not on profits from stock gains. Those go to the investors (LESS the fees, or course) but always watered down by selling their winners.

It took me a long time to understand the ARK Invest business model until it was explained simply by Dave Lee in this video:

Simply put, ARK Invest doesn't make it profits from its investments (those are assets under management, so the profits don't belong to them). ARK Invest makes its profits from the management fees. That's why they swing trade, to attract more investors with what looks like outsized returns.

Until you compare those returns to NOT selling.

Dumb assertion. And they make much more money when TSLA trades flat, like for about five years. Or at least they don't make nothing at all, like being 100% TSLA would have been for them.

It's way too easy to say "see how smart I am to invest in TSLA" if all you look at is the times when it's a rocket to Mars.

 

[BornToFly]

I have never considered writing calls or puts because of the increased risk associated. But giving the upcoming 5:1 split and the fact this forum is very bullish I am surprised how much I hear about people writing covered calls but not about writing puts. With the split bringing the cost of a put being exercised to ~400x100 or $40,000k could someone advise as to why as a Tesla bull writing a put would be a bad idea. If it's not exercised you get to keep the premium. If it is exercised you have to buy TSLA, and if you believe the long term thesis you would be happy to do so any way. Is there a downside to this idea that I am not thinking about properly?

You could in theory write one weekly put a week and pull in maybe 1,000 dollars a week or so, and if you are forced to buy, you are buying something you believe has long term value otherwise.

I personally won't do this until next year if I do for various tax reasons, but I was curious on other peoples takes.

I've been a Bull since 2013. I almost got wiped out writing Puts that I believed had zero chance of ending up in the money, only to watch the SP drop to extremely low levels. I had plenty of margin to start with, but as the SP dropped, my margin decreased while the requirements went up. I almost got wiped out. (In other words, if you are a true TSLA Bull, all your money is already in the stock, so you don't have money laying around to buy shares that might get assigned to you). I had to borrow money from family to avoid selling stock at a loss. I then learned about buying cheap OTM Puts to make the margin calls go away. I was able to survive the dip and get to 20X my account low today. But I learned a huge lesson. I did recently sell some Jan 2022 1000 SP puts, but only a few. Since I'm maxed out on TSLA, and I plan on selling some shares at some point, it is risk free to write OTM covered calls for strikes that I'm ok selling shares at (4,200 SP). Selling OTM Puts that you think have no chance of getting assigned will only draw anger from the Gods and the SP will drop on you at the worst possible time.

 

[Bet TSLA]

I'm working on it, although I'm not sure I'll get there.

Even though the cheapest TSLA shares I ever bought were ~$180, and most of my shares were bought in the $200s and $300s, if I converted all my options to shares today, my cost basis on my entire TSLA stock position would be $31, and I think I'll get it down to $25-30 this year, if we get close to a post-split share price of $600.

It's unlikely there will be similar returns on TSLA options as we've seen over the past year ever again, so I'm not sure I'll ever get my cost basis down to the teens. Besides, there's a chance some option trades go wrong as well. But there should still be a solid decade of TSLA stock appreciation ahead of us, so maybe I'll get it down to the teens at some point through a few more options trades.

It'd be pretty cool to be able to get my cost basis down to IPO price, even though I was never able to buy during that period. It's not a goal per se, because it'd be a stupidly arbitrary goal to have, but if I do happen to get there, it'd be really cool

If I make $1M trading TSLA short puts and then buy shares with the profits, what's my cost basis? What if I buy only one share of TSLA and let the rest sit in cash? I really don't know how you figure this. Seems kind of pointless to me.

Edit:
Or let's take something more concrete. I bought TSLA Mar 2021 750 calls on Apr 14 2020 when TSLA was at 709.80. I paid 177 per call, or $17,700 per contract. For that $17,700 I could have bought 25 shares at 708 (close enough). At the moment TSLA is at 2213.40 and those calls are at 1491.10. So if I sold a call contract that would provide me with $149,110. And if I then bought 25 TSLA shares it would cost me $55,335. So I'd have $93,775 left over. So what's my cost basis in those 25 shares? What about the other Tesla shares I own?

I think once you start trading derivatives there's no real way to compute a meaningful cost basis any more. Nor how much you actually have at risk. Nor what your CAGR is (except in gross terms). Nor any of the other typical numbers investors use.

 

[Bet TSLA]

Do you anticipate IV crush next week?

Has something happened that would affect IV?

 

[PeterJA]

Dumb assertion. And they make much more money when TSLA trades flat, like for about five years. Or at least they don't make nothing at all, like being 100% TSLA would have been for them.

It's way too easy to say "see how smart I am to invest in TSLA" if all you look at is the times when it's a rocket to Mars.

I'll add that ARK provides a valuable service for people who don't know as much about Tesla as @Artful Dodger does... people who don't have time or skills to spend all day every day researching the company. Of course ARK charges for their expertise in picking and trading stocks. Of course they want to attract more clients. That's called business.

Like Dodger, I don't need ARK to pick or trade TSLA for me, but I'm very happy to pay them for their expertise in picking and trading the 42 stocks in their genomic fund. I don't have time or skills to research all those companies.