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

[Fact Checking]

This was my first thought. If you're rolling one week out week after week, you're keeping yourself in the highest theta decay "region". You are also holding maximum leverage, however. So yet again, pros/cons.

There's a special case though: if all you want is to capture a step up in the stock price, never allowing options to get within ~30 days of expiry will minimize effective theta decay. I think this matches @KarenRei's thesis.

Also, doing it when the SP is higher reduces rollover transaction costs, as the bid/ask spread tends to be a lower percentage.

 

[viridi]

Amazing game of whack-a-mole at $350 since a little before 1:00 p.m. EST.

 

[Nocturnal]

Amazing game of whack-a-mole at $350 since a little before 1:00 p.m. EST.

It's like magic. I guess people really don't want it to break that level.

Sorry for my contribution to Off Topic: Police are trained to shoot at the grill/license plate if the vehicle is coming at them and license plate/taillight if you are moving away from them.

My question stands.

 

[Fact Checking]

Exactly. I want to be in a high-theta environment near earnings, for maximum leverage. Far from earnings I want to be in a low-theta environment, to capture long-term changes in the stock. So I try to time calls for expiry shortly after ER.

Right now I'm focused only on Q1. After this quarter however I'm going to be stretching out further, with "low risk" options for low strike prices and distant expiries, "moderate risk" for moderate strike prices and expiries two quarters out, and "high risk" for high strike prices and one quarter out. All as close to post-ER as possible. I want to max out by gains but at the same time have some resilience against the sort of SP freakouts we saw last year.

So options right after ER tend to carry an implied volatility premium - often a significant one.

Theta costs can be further reduced by rolling over far LEAP to the next LEAP, when gamma is high.

I believe when gamma shoots up it will finance some of the theta decay, as the next LEAP will have a lower gamma premium. (I'm not 100% sure about it though.)

That's under a two stage strategy:

• First use the LEAPs to wait for the step-up in SP
• Roll over until it happens,
• Once it happens allow the option to expire, and cash out at a suitable peak

 

[Nocturnal]

The simple fact is that police LIDAR units don't care about measuring the speed of distant targets. But in a car going 35 meters per second (78 mph / 126 kph) absolutely need range. Car LIDAR units need much greater ranges, which means much greater powers.

If that's accurate then that does make sense. Thanks.

 

[Fact Checking]

120 days out

Is this observational data, or theory based?

 

[Silent Ludicrosy]

OT

Tesla booth at the Barrett Jackson auto auction. Didn’t see an Tesla’s up for auction but lots of interest at the booth. Also some cool Franz art giveaways.

 

[mongo]

OT Laser Safety:
Laser hazard distance chart - Laser Safety Facts

 

[KarenRei]

I think based on this discussion I'll set targets to roll at ~$352 for my $300s, ~$356 for my $330s, and ~$360 for my $360s... along with making my targets more lax with time that goes by without an announcement. Thanks for the feedback, everyone.

If an excessive amount of time goes by with no announcement and it looks like 22 Feb might start coming under threat, I might start considering an additional rollover into March.

 

[shlokavica22]

Exactly. I want to be in a high-theta environment near earnings, for maximum leverage. Far from earnings I want to be in a low-theta environment, to capture long-term changes in the stock. So I try to time calls for expiry shortly after ER.

Right now I'm focused only on Q1. After this quarter however I'm going to be stretching out further, with "low risk" options for low strike prices and distant expiries, "moderate risk" for moderate strike prices and expiries two quarters out, and "high risk" for high strike prices and one quarter out. All as close to post-ER as possible. I want to max out by gains but at the same time have some resilience against the sort of SP freakouts we saw last year.

We discussed this in the past when you bought your first options. Higher strike prices doesn't necessary equal higher risk.

 

[RobStark]

It isn't just Kim at LikeTesla that are taking Tesla to task for customer service but many/most Tesla youtubbers.

Here is Zac (father) and Jesse(son) discussing it at 3:40 of their over 1 hr youtube show.

Jesse owns a Model 3. Zac owns a Model X, his wife owns a Model 3, he won a Tesla Roadster through the referral system and has even reserved a Tesla Semi he plans to drive across America/southern Canada carrying said Roadster to visit people who have used his referral and give them rides in his Roadster.

 

[shlokavica22]

Is this observational data, or theory based?

Pro traders mention ~65 days for SPX contract.

 

[TradingInvest]

This is a serious shot across Tesla's bow and will probably have a negative effect on company valuation and stock price. Essentially, it's FUD that rings true, even among Tesla loyalists.
It seems to me the root of the problem is this: Tesla is, culturally, a Silicon Valley company. Some of that's a plus. Iterative, over-the-air fixes are really great, whether it's a frozen laptop or an unresponsive Model 3. But the attitude of "ship now, fix later" was always going to bite Tesla, and it looks (from these videos from ardent Tesla fans) that it has.
So if you are OK with how your hardware and software problems are dealt with today by "traditional" hardware/software companies, you're likely OK with how Tesla deals with missed appointments, blown deadlines, organizational confusion and mysteriously unresolved "issues". If, on the other hand, you're like virtually everyone else on the planet and hate calling technical support to solve a hardware/software problem, you might well think twice about buying a Tesla vehicle.
As Tesla's founder said a long time ago, Software's easy. Cars are hard.
He was right.
Robin

Charlie Munger was sitting at a dinner table, a woman next to him asked why he is so successful with investment? and she insisted Munger to answer with one word.

His answer is "Rational".

In investment, staying rational is critical. Remember when Model 3 production started in 2017, lots of people were talking about bad quality: "people can see panel gaps from Mars"... Tesla replied "we constantly improve quality". The next year Model 3 got 150,000 happy customers.

When I hear about service complains, my first thoughts are: 1. how common is this? 2. can Tesla do better in this area in the future?

This is not something that will bring down Tesla the brand as people suggested. My Model 3 has no issues after almost a year. Even if there were issues, I would NOT hesitate to buy Tesla again. The car is just so damn good. I asked all my friends who bought Tesla cars, everyone love their cars, everyone said their next car will be Tesla again.

Tesla will get better with services in the future as financial situation continue to improve. Stay rational.

 

[AlexS]

Charlie Munger was sitting at a dinner table, a woman next to him asked why he is so successful with investment? and she insisted Munger to answer with one word.

His answer is "Rational".

In investment, staying rational is critical. Remember when Model 3 production started in 2017, lots of people were talking about bad quality: "people can see panel gaps from Mars"... Tesla replied "we constantly improve quality". The next year Model 3 got 150,000 happy customers.

When I hear about service complains, my first thoughts are: 1. how common is this? 2. can Tesla do better in this area in the future?

This is not something that will bring down Tesla the brand as people suggested. My Model 3 has no issues after almost a year. Even if there were issues, I would NOT hesitate to buy Tesla again. The car is just so damn good. I asked all my friends who bought Tesla cars, everyone love their cars, everyone said their next car will be Tesla again.

Tesla will get better with services in the future as financial situation continue to improve. Stay rational.

hopefully Elon understands that Tesla service is a problem, he haven't tweeted that Service Hell is on and they are working to solve it. But indeed service is very important topic to solve otherwise future sales can get a big hit.

edit: maybe problem is solved as they don't need to deal with deliver hell and now more people can deal with service problems.

 

[mershaw2001]

T Rowe sold about 20% of their shares in Q4

Ugh there's so much crap in this thread these days. Where did you see this? I have been going through the 13F filings each day and I do not see an update from T Rowe, and around 9/30/18 they added 5 million shares so I don't think I agree with you.

 

[Johnny Ma]

carsonight responding to question re: whether or not Tesla has production capacity to supply the 40,000 powerwalls available for subsidy in Australia:

"The very last I heard GF1 has two of the old lines producing cells for power walls and power packs, so that is 4 GW hours per year. Panasonic can ramp up production as soon as Tesla is ready for it, which will likely be after GF1 is expanded sometime this year."

 

[KarenRei]

hopefully Elon understands that Tesla service is a problem, he haven't tweeted that Service Hell is on and they are working to solve it. But indeed service is very important topic to solve otherwise future sales can get a big hit.

It's a question of timing. Tesla also doesn't want people freaking out about them not being able to make their convertible bond payments, and hence needs to accumulate cash. And they have a lot of capital investments to make over the coming year.

But I'm sure they'll significantly improve the situation. It's just a question of when.

 

[N5329K]

Charlie Munger was sitting at a dinner table, a woman next to him asked why he is so successful with investment? and she insisted Munger to answer with one word.

His answer is "Rational".

In investment, staying rational is critical. Remember when Model 3 production started in 2017, lots of people were talking about bad quality: "people can see panel gaps from Mars"... Tesla replied "we constantly improve quality". The next year Model 3 got 150,000 happy customers.

When I hear about service complains, my first thoughts are: 1. how common is this? 2. can Tesla do better in this area in the future?

This is not something that will bring down Tesla the brand as people suggested. My Model 3 has no issues after almost a year. Even if there were issues, I would NOT hesitate to buy Tesla again. The car is just so damn good. I asked all my friends who bought Tesla cars, everyone love their cars, everyone said their next car will be Tesla again.

Tesla will get better with services in the future as financial situation continue to improve. Stay rational.

Yes. But "rational" can can mean different things depending on your needs and situation. For me, rational means holding TSLA (with both hands), delaying buying one of their cars until they get their act together, and hoping not too many people do that until then.
Robin

 

[Drumheller]

carsonight responding to question re: whether or not Tesla has production capacity to supply the 40,000 powerwalls available for subsidy in Australia:

"The very last I heard GF1 has two of the old lines producing cells for power walls and power packs, so that is 4 GW hours per year. Panasonic can ramp up production as soon as Tesla is ready for it, which will likely be after GF1 is expanded sometime this year."

Could Tesla repurpose the 18650 cells into power walls and switch the S and X to 2170s?

 

[RobStark]

No one claims any sales channel is without horror stories.

Consumer Reports says Model 3 reliability is average.

Experian says Tesla has highest customer loyalty, customers who plan on buying again, at 80.2%.

But the complaints about customer service, non returned calls/emails, wait times to get hold of Tesla employee on phone, non ability of CR representative to solve complaints is rising fast on social media. And it is not just in proportion to increase in Tesla customers.

If Tesla establishes a reputation for having atrocious customer service it will be very hard to undue in the future.

Lexus established an excellent reputation for customer service out of the gate that endures to today even though actual surveys put it above average but no where near where it was in the 90's.