Do the longs here have a standard in terms of Covered Call writing strategies? When a stock is in a downtrend, one wise move is to write out of the money longer-term calls to capture some of the costs of the downtrend. I do hope you guys have had this strategy for some time this year in order to soften the blow a bit. Those under 100 shares in their accounts cannot do much of this unless their brokerage has allowed it.
I've been writing credit spreads / selling covered calls the whole year. It hasn't counteracted my losses by a long shot, but it's lessened the sting.
I have no strategy on this and I'm not aware it has ever been discussed here - well covered calls, yes, but not in any specific context. There is a Tesla trading thread somewhere, might be stuff in there.
TBH I'm not personally comfortable with writing covered calls because Tesla is so volatile. It can rally as quickly as it drops and I could have my shares called-away at any time, which I don't really want. If you have ideas to persuade me otherwise then my mind is open.
If you're concerned about a runaway in the stock price, you can cap your potential losses in the event of a "white swan" event by selling credit spreads. Your loss is capped at (Difference in Strike Price) - (Credit from Spread). As an example, I closed out some 5/17 $235/$240 credit spreads today. I had sold them at an average price of $1.65, so if TSLA closed today at $240 or above my maximum loss was capped at $335 per spread. However, that would have meant my LEAPs, monthlies, and stock would have appreciated, so I was fine with the potential loss, and furthermore, I was content to have simply rolled the spreads out and up as long as I needed until the spreads expired worthless, as, again, my long calls and stock would be continuously going up in value in the interim.
Frustrating time to be a TSLA long .... as much as I believe in Elon and the company I'm no fan of his emails. I think he could learn how to say the same thing and lessen the impact on the stock price although I realize that he's never ben the smoothest communicator.
For the time being TSLA is in the doghouse and I'm not seeing any real positive numbers that would turn this thing around in the near term .... so I'll just hold on tight and keep faith that they are making pretty incredible cars that are still without any real competition. But for the time being the optimism that once drove the SP higher seems to be gone .....
Cheers to the longs ....
Couldn't agree more. I know it's his style, but man, you'd think he could chill on the negative hyperbole when investors are already
clearly hesitant to throw money at your company. This same e-mail could have been framed so differently. Who knows, maybe it wouldn't have mattered. Probably not.
I am not an investor but my impression is that the street is fatigued by Elon/Tesla whiplash.
There has been an awful lot of drama over the last year and the signal can get lost in the noise. I see the noise as SEC, Model 3 ramp, Gigafactory uncertainty, staff turnover, pedo nonsense, Autopilot hyperbole, etc.
At this point I think the street wants hard numbers and evidence to bump stock prices; the days of Elon’s projections turning into higher TSLA are over.
If FSD really starts driving people cross country in December 2019 (31st, midnight, Elon time), Q2 and Q3 execute, Model Y development and deployment remain on track, Shanghai starts spitting out automobiles, Semi shows some life, and cash on hand stabilizes or improves I think there’s a huge potential upside.
I also agree with this. At this point, I don't see anything but cold hard facts (and cash) that will pull us out of this tailspin.
Well, I'm off to do horrible medical things for the next week. My father, who is much much more brilliant and insightful than me, thinks Tesla is cheap at this price and is doing fine. As do I. We'll see if the stock price is still artificially depressed in June, or whether leaked delivery numbers start causing buyers to show up.
Cheers and best wishes to you,
@neroden.
Yes, we discussed earlier. I mean I am long, seems the derogatory term is a "bag holder", which is fine. But I do worry that the low SP is dangerous for Tesla, even though rationally it isn't.
I also get stressed by the low SP, it makes me miserable, even though I've no plans to sell and have plenty of time until retirement. It's a chronic stress for me.
And yes, don't look at the SP, leave the forum and live your life, I know, but I can't. I need to devour every bit of information I can.
Hang in there. You might want to institute some downside protection just to help you relax. Consider it insurance.
Unfortunately the ideal times to trade options are completely counter-emotional to what you want them to be. Dips like this are the worst time to be selling covered calls since everything is down, even though this is when we all want to scrounge up as much of a silver lining as we can.
You can get more for your calls if you go longer-term, but you'll still be getting pennies on the dollar since options are leveraged on the way up and the way down.
This is an ideal time to be buying calls or selling puts, but it's hard to double-down when you're in damage control mode.
Generally I agree with you, but someone who followed this advice since the first downtrend this year would be severely in the hole.