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

[corduroy]

SpaceX launch in a few minutes:

Watching these launches live will never get old.

 

[Sudre]

Have you guys seen this? Any thoughts? He seems to have his hands full already IMO.

Elon Musk Is Proposed To Take Over Streetscooter and Operate Under Tesla Leadership | Torque News

This would be a better fit for Rivian but I don't think Rivian is ready to branch out to other countries yet. Doesn't Rivian already do last mile delivery vehicles? They could buy their foreign competition and start sell in Germany.

 

[kanweg]

This would be a better fit for Rivian but I don't think Rivian is ready to branch out to other countries yet. Doesn't Rivian already do last mile delivery vehicles? They could buy their foreign competition and start sell in Germany.

Rivian will bring the R1s to Europe in 2022.

 

[jhm]

Have you guys seen this? Any thoughts? He seems to have his hands full already IMO.

Elon Musk Is Proposed To Take Over Streetscooter and Operate Under Tesla Leadership | Torque News

Yes, I think Tesla should take this on. The basic design is already fit for purpose. Tesla ads value by bring it into the Tesla ecosystem, refining the manufacturing process, and adding self-driving capabilities. Ideally you'd want the scooter to be fully autonomous to deliver mail and packages without a human. But more immediately you could use self-driving to follow the postal carrier on foot. Any sort of automation that makes postal carriers more productive can unlock enormous value. So fundamentally I see this as an opportunity for Tesla to apply their AI capabilities to more than just FSD autos.

 

[Bet TSLA]

Yes, I agree it’s purely a buying and selling transaction but the loss doesn’t become a gain until it expires. That was kind of my point, the loss hits immediately as you mentioned but the gain is postponed until it eventually expires worthless. I just went through this where a $4000 loss at the point of rolling didn’t become a gain until it expired.

Then you should be clear about what this tactic is: "I just made a bad bet and lost my money. I'll just repeat it because I like losing money." You are covering up this reality by owning shares which are, at the same time, making more money than your bad bet is losing. But you should really just stop making the bad bets.

 

[TravelFree]

being the casino, by writing OTM covered calls. I prefer having time work in my favor rather than against me. It has worked out great. Made good money which I used to purchase extra shares.

I know it's the conservative play, but writing covered calls and/or puts if you are sitting on cash can be a great strategy. I am sure I will do it again in the future when the IV increases enough for it to make sense. In fact, one goal I have is to own enough shares to be able to comfortably write CCs and generate regular income during retirement. It seems to me that's a much more profitable method to generate income than buying bonds or dividend stocks. This assumes continued volatility in Tesla stock which is questionable looking 10 years out.

Yes, I agree with the OTM CC sale. It's my only strategy but I find it worked well for almost half a year in 2019 when the stock traded flat week after week. I rarely sold a few covered calls for longer than a week. Every week I used the volume on Tuesday or Wednesday and then pick a strike at the next level. Then last week in October, I had 300 of my 500 shares called away but those shares had a very low basis and were long so lots of profit. The result of that was my new 2020 MS. I don't consider winning until I can have something besides numbers to use.

The reason why it worked and hasn't since is because I found that selling covered calls for weekly income only works when the stock has no growth. It doesn't have to fall much, just no growth. I haven't sold any Tesla CC since and find trading the stock around a growing core position has allowed me to recover almost all my original shares (split adjusted). My plan is to wait until I see Tesla trading flat for over a month with no real catalyst for growth try it again. Obviously those who play the big numbers and willing to take greater risks can play the options during growth periods, but so many lose it all with one mistake. I'm not willing to take that level of risk. If my shares get called away I will still make money but not as much as I might have just selling at market. There are other parts of my strategy that I use too to avoid the tax bite but that is not the topic here.

I think you have the right idea, be the casino. I just say play with the house's money.

 

[CLK350]

From Elon directly from his Tweet,Tesla is not just cars

Elon Musk
Tesla is a vehicle for creating & producing many useful products
12:47 PM · Nov 21, 2020·Twitter for iPhone

 

[EVortex]

Have you guys seen this? Any thoughts? He seems to have his hands full already IMO.

Elon Musk Is Proposed To Take Over Streetscooter and Operate Under Tesla Leadership | Torque News

Unexpected buy-out opportunities occur periodically and if pursued require resources for due diligence and then transition if acquired. It would have to be a tremendous opportunity prioritized above the other plans currently in the works for Tesla to divert focus and resources. Acquisitions often result in cleaning up someone else’s messes and Tesla does not need that.

 

[dgodfrey]

Then you should be clear about what this tactic is: "I just made a bad bet and lost my money. I'll just repeat it because I like losing money." You are covering up this reality by owning shares which are, at the same time, making more money than your bad bet is losing. But you should really just stop making the bad bets.

Kind of, but not really, at least that's not been my experience. I've lost no money so far using this strategy.
The initial CC that went upside down was a bad bet, no argument. By rolling which I prefer over just eat my losses and buy it back are that I don't need to come up with the cash to stay in partial control of my 100 shares. As I mentioned on my original post, your gamble is still in play and yes, if TSLA continues to run +20%/month indefinitely, you might never get ahead of it. The upside is:

• my initial CC contract was for $450 and e.g. I've rolled it twice to $800 strike 3 months from now. It closes at $750 at expiry so I have my original 100 shares that are now worth $750 as would the 100 shares I bought back for $5k instead of rolling initially. No difference in value of my portfolio except I sold 10 shares to fund the buyback. With rolling, I used the intrinsic value of the 100 shares as leverage for the new CC.
• My CC contracts are typically written with a <5% possibility of hitting per the options analyzer. No guarantee as the stock split shows. History has shown that TSLA cannot maintain a 20% increase/month in SP indefinitely which is what I'm counting on.
• My strategy is to salvage an initial bad bet back to neutral or even continue using the initial contract as any other CC earning income/realized gains.
• As much as I play it in my head that I'm okay selling at $800, when the time comes, looking at my tax liability and the probabilities of it dropping back enough to sell a put and end up with more shares than I started, generally aren't convincing enough. I'd rather just keep the shares and let them increase in value hopefully.

 

[PeterJA]

...People who spend $80K on a sluggish, gas-guzzling, over-weight, top-of-the-line F-150 King Ranch or Dodge Ram Laramie Longhorn with a flexy frame and fragile body work and windows will become the laughing stock of the truck world. Those kind of trucks are effeminate next to the Cybertruck (and not in a good way). Trucks are not supposed to be effeminate....

The Cybertruck syllogism:

Cybertruck looks and acts military (bulletproof "armored personnel carrier from the future").
Military is badass.
Truck buyers like badass ("Built Ford Tough"..."Guts. Glory. Ram.").
Therefore, truck buyers will like Cybertruck.

Built-in-Texas is the brilliant coup de grâce to F-150 and Ram.

 

[Krugerrand]

And to glom onto the always appreciated options strategy "not advice" from @Krugerrand, @StealthP3D, @adiggs, @ggr,@Lycanthrope and many others, here's my still wet behind the ears "not advice".

Real money decisions sink in further than make believe accounts as @Krugerrand stated.

Take what you might spend on a short term OTM call and pick up 100 shares of a cheap stock like Arcimoto (FUV). It's had a recent doubling but still affordable at $17/share. Write a CC contract. The worst that can happen is you make money selling it (called away) at a profit. I considered it cheap tuition to see how the time decay (theta) accelerates value. It's also important to understand the impact IV has on premiums. As others have mentioned "buy low, sell high", not in reference to the share price but using IV as the relative variable. When IV is low relative to a metric you determine, buy calls, when IV is high, sell covered calls.
​

Selling CC's doesn't necessarily put your shares at risk when exercising the "do over" power of Rolling.

Example: You wrote a CC contract after battery day that expired yesterday 11/20 with a strike of $450. By yesterday morning, it was assumed that they would be called away so your option is let them go leaving $5k on the table so to speak (but still a healthy profit), or buy them back for $5k which might require selling 10 shares, or what I do is roll to a higher strike price and later expiry.
This accomplishes two things:

• Keeps your 100 shares in play, kind of, which I'll get to later
• Puts a loss for the cost to :"buy them back" which effectively your doing, on your taxable earnings.
  • I can't self direct my Roth so all my profits are taxable so this is important for me
• This loss stays on the books until expiration so timing can be used to your advantage e.g.:
  • You roll yesterdays CC to a 3/19/20 $650 strike which if not an even trade might make you a few bucks.
  • That $5k loss will carry into the new year and not become a realized profit until expiration, assuming it expires worthless
  • So if you want to negate some gains, this will do that for 2020
• But eventually, you want these 100 shares back free and clear so how does that work?
  • Taking a bearish approach, you hope that the example above ends up with a share price of $649 at expiration(ignoring the Saturday auditing/AH that could effect the final SP)
  • If it does, success. But now you have a $5k gain but if you owe the taxman, you must have done something right.
  • If it goes to $700 at expiry, you roll again. Each time at a higher strike price. Eventually, TSLA will calm the 'F' down and your strike price will catch up to the share price. When that happens, you've got your 100 shares back at a much higher share price than they were yesterday.

As mentioned above, still a bit green myself so if some of the experts can chime in and admonish or confirm, greatly appreciated.
Also, this assumes they don't get called before expiry which I've heard, can happen but not seen it personally.
I take this approach (it's rarely needed however) because as I mentioned, my gains are taxable and if a CC gets called away, that puts me in not just a higher tax bracket but paying 32% on the short term gains is no picnic. I'm bullish on TSLA but see CC's as a great opportunity to generate some income. They aren't the lottery tickets that buying calls can be but even if you're wrong, you make money.​

I rest my case. Too much work. I baked 4 dozen peanut butter cookies before you had typed out your second paragraph.

 

[Navin]

Saw this online. LOL

 

[adiggs]

Then you should be clear about what this tactic is: "I just made a bad bet and lost my money. I'll just repeat it because I like losing money." You are covering up this reality by owning shares which are, at the same time, making more money than your bad bet is losing. But you should really just stop making the bad bets.

Many CC posts - I'll use this one as a departure point for an additional way to think about CCs.

At some point in life, I expect that we will all shift from a growth mindset, to an income with growth mindset. While constantly increasing portfolio value is nice, we eat / live indoors / drive nice cars / take nice vacations using cash. That cash can come from selling shares, but that leads to an emotional problem, at least for me; I'm not ready to sell shares for cash to fund living expenses. And other investments don't generate (nearly) enough income for me and my family to cover the living expenses and leave me passively holding the TSLA shares as we've done for the last 8 years.

EDIT to add about the mindset shift: at least for me, this point arrived after I felt like I had "enough" TSLA shares. More broadly, there is a definitely level which is "enough", and further growth will be highly beneficial to some charity(s) some day when we've passed, but really doesn't affect our lifestyle for the remainder of our life. After all, there is a limit to how many Roadster we can use, or houses we can own, etc..

Which leads to an additional way to think about Covered Calls; think of them as pre-sales, of shares that you want/need to sell anyway. If you're ready to sell today at $500, then surely you're willing to sell at $600 in a month, and you can be paid to complete the sale in a month at the higher strike, as well as receiving an extra $100 over what you were willing to sell at. You either get the premium AND sell at $600, or you get the premium and keep the shares (which allows you to repeat the exercise the next month). This isn't without risk - nothing is without risk (ANY decision including non-decisions), but if the risks of the decision (or non-decision) are not immediately obvious, this is a good reason to bring those questions to one of the options threads.

Obviously this doesn't work when you need a big whack of cash for a big expense right now, but for month to month living expenses, this can be a nice alternative to simply selling shares periodically for those living expenses.


And of course, as others have discussed, I can choose to roll some or all of the contracts to avoid having them called away. That's a different investment decision when expiration day approaches. There are lots of mechanical details in the options related threads; instead of rehashing them here in the main thread, I commend any and all of them for those interested.

 

[Curt Renz]

Business Insider - this morning: All of Tesla's other services will be worth more than its car business, according to one Wall Street analyst who says the company should be compared to Apple, Tinder, and more.

 

[Paul_SF]

Business Insider - this morning: All of Tesla's other services will be worth more than its car business, according to one Wall Street analyst who says the company should be compared to Apple, Tinder, and more.

All those companies and more, combined. Graham left that part out. /s

 

[EVortex]

Business Insider - this morning: All of Tesla's other services will be worth more than its car business, according to one Wall Street analyst who says the company should be compared to Apple, Tinder, and more.

“His 2030 ‘sum of the parts’ valuation gives $254 per share to Tesla's core automotive sales category, which CEO Elon Musk has said will reach 500 million units this year. That's about 47% of his total target.”

That’s a lot of units, Graham.

 

[JustMe]

Is there a thread that talks about the pros-cons of model Y performance vs long range? Looking to purchase this month.

Thoughts on white, white interior, tow hitch and 19: wheels. I'm not into driving fast very often (I'm getting older).

Heck, there is a whole Model Y sub-forum. I’m sure you’ll find lots of informed options there.

Model Y

Let us know what you order!

 

[Artful Dodger]

Is buying call options the same as "writing" options?

Typically when people say "writing" options, they mean "selling" that call option contract. Although, you can "write" or "sell" a put option contract also, but I think that's not the context you were referring to.

Cheers!

 

[Krugerrand]

Business Insider - this morning: All of Tesla's other services will be worth more than its car business, according to one Wall Street analyst who says the company should be compared to Apple, Tinder, and more.

Tinder? Tesla has a Tinder product/service? Next thing they’ll be comparing Tesla to Etsy.

 

[UnknownSoldier]

Tinder? Tesla has a Tinder product/service? Next thing they’ll be comparing Tesla to Etsy.

Tesla Owners Only dating site, you say?