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

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Are you saying they won't even be close to survive or ever close to invest in? The former, they have a ton of cash that Tesla never had at their fingertips... and they have hungry big dollar investors ready to dump more if they need. The latter, I can see that. Q2 was better than Q1, but still so far off the mark.
I give their chance of survival at around 1% or so. And if they can get their profit margin to be positive, then I'll up that percentage to 10% because thats the same chance Tesla had when their profit margin was positive. Yes it's just that difficult.

And I am assuming their goodwill from Amazon or whoever are used up by then because from current trajectory, they need to burn another at least 20-30b to get there. Let's see how much patience these big guns have.
 
# of times you'd have lost money selling 20% OTM TSLA puts, in the entire history of the company: 0.
(there was only 1 drop of 20% or more, ever, the week of the first covid lockdowns- and it was barely 20% so you'd have basically broken even that week (or still turned a profit with a small roll or just waiting a bit)

As to calls, that # is also 0 if you have even a basic understanding of rolling options (as you can count on your fingers with fingers left over the # of weeks, ever, the stock moved by more than that much on the call side, and never did so so quickly you couldn't have rolled out before going ITM ahead of said gains)

By all means there's lots of ways to take big risks selling puts and calls nearer TM (or overleveraging with tight near TM spreads- or other ways of not understanding what you're doing)- which is why the other thread starts with links to dozens of hours of education on understanding how options work and the strong suggestion you don't do anything before going through that education.

But once you do, selling "safe" comfortably OTM weeklies can provide a reliable additional income stream (or funding to increase your overall TSLA holdings) without significant concern for getting wrecked...(and esp. on the selling calls side, the worst possible outcome if you screw up is just "only making a smaller profit" not actually losing but even that can generally be avoided with timely rolling the very rare times it's in play).

(there's still not 0 risk of course-hence the quote on safe- puts for example would still potentially leave you exposed to the "elon hit by a bus" black swan type events... or some folks just can't stick to a plan and will go all icarus with greed moving too near TM, but that's not a strategy problem that's a personal one)
@Knightshade , 20% OTM meaning... at a Strike price 20% lower than SP at time of selling those puts? ...or at a premium 20% below the premium at time of sale? (Yeah, I have a lot to learn)...

Is the "Be the House" thread the one I need to go to to learn all this from the beginning?
 
One person is not statistically significant. You could also point to someone who became rich shorting TSLA, that doesn't mean it has a superior risk/reward ratio. And I'm not saying you can't make money selling covered calls, obviously, plenty of people do. It can also greatly impact your ability to make larger amounts of money by risking your position. That's all I'm saying. If you don't understand this, I'm not going to show you the math. If you can beat the system, more power to you. Just be honest with your boo-boos that cost lost opportunity.
There's no need to be condescending, you're not even correct here.

Thank you for explaining to the world there are risks in buying and selling options contracts. For the 80th time.

Let's go ahead and leave any further options risk talk to the options threads.
 
Just curious…..for those that are buying shares today, that will not be settled by the record date of 8/17, what happens to those shares after the split? How can they not split? You can’t have one share trading for $9xx post split. Wondering if the record date really matters.

Yes, you do get the additional shares even if they settle after 8/17 with something called a "due bill". @Boomer19 is better at explaining this.

edit: Here is a post by @Boomer19 somewhat addressing this:Boomer19's Post
 
# of times you'd have lost money selling 20% OTM TSLA puts, in the entire history of the company: 0.
(there was only 1 drop of 20% or more, ever, the week of the first covid lockdowns- and it was barely 20% so you'd have basically broken even that week (or still turned a profit with a small roll or just waiting a bit)

@Knightshade Hi, Icarus here. Quick question. That 20% figure. Is that based off 9:30 open time, 4pm close of previous week, etc? From X to Y has never moved more than 20%. What exactly is X and Y? Much apprecaited!

As far as I can see, this statement is true on a dataset from IPO through last week, if you sell-to-open at Mon open (9.30am) and buy-to-close at Fri close (4pm), during regular trading hours (RTH). Note that once, the stock price dropped below 20% in after hours. Always close out your short positions if the stock price is close to your strike price, or if the momentum is high enough that it might carry the stock price beyond your strike price AH.

1660575363439.png


However, if you were super unlucky and sold your Put at the week's high price (which you obviously cannot determine in advance), the max peak-to-trough has been -42.3% (trading week ending Fri Jul 10, 2010).
1660575489767.png


Had you sold your Put at the high of the week, and waited until the trading week's end (close price on Fri), you'd have had the following stock price distribution:
1660575641898.png


Worst PUT writing weeks:
1660575695794.png


"Worst" CC writing weeks:
1660575773496.png


NOTE: Do not write covered calls when the stock price is down! That strategy has a much higher probability of the stock price appreciating more than 20%. This applies to puts vice versa.
 
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The statement is true on a dataset from IPO through last week, if you sell-to-open at Mon open and buy-to-close at Fri close, during regular trading hours (RTH). Note that once it dropped below 20% in after hours. Always close out your options if the stock price is close to your strike price, or the momentum is high enough that it the stock price could be pushed beyond your strike price AH.

View attachment 841184

However, if you were super unlucky and sold at the week's high (which you obviously cannot determine in advance), the max peak-to-trough has been 42.3% (trading week ending Fri Jul 10, 2010).
View attachment 841185

Had you sold at the high of the week, and waited until the trading week's end (close price on Fri), you'd have had the following drawdowns:
View attachment 841186

worst PUT writing weeks:
View attachment 841187

"worst" CC writing weeks:
View attachment 841188

NOTE: Do not write covered calls when the stock price is down! That strategy has a much higher risk of the stockprice appreciating more than 20%.
Same logic applies to selling of shares. You are suppose to sell on green days, not on red days.
 
For those who are thinking about selling Tesla shares, absolutely sell them by selling covered calls. It's free money..like literally I can't think of any downside if you sell in the money covered calls. You get your share sold at the price you want plus a premium. Why would you not want to take the free premium?
That’s actually an idea I might implement when TSLA starts nearing the 2 trillion mark. Just sell CC’s at a 2.5 trillion market cap share price since that’s the valuation I plan on selling around half of my shares anyways.

Thanks for the idea
 
For those who are thinking about selling Tesla shares, absolutely sell them by selling covered calls. It's free money..like literally I can't think of any downside if you sell in the money covered calls. You get your share sold at the price you want plus a premium. Why would you not want to take the free premium?

There is plenty of downside if you are selling them because you need the money. Because if it goes down, your calls don't excercise, you don't have the cash, and your shares are not worth as much as what you could have actually sold them for. What do you think you are getting paid the premium for?

I shouldn't need to explain this, but people seem to have "funny" thinking.
 
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Just curious…..for those that are buying shares today, that will not be settled by the record date of 8/17, what happens to those shares after the split? How can they not split? You can’t have one share trading for $9xx post split. Wondering if the record date really matters.

The date of record has no significance in the context you are speaking of. It's just a technicality. You can buy and sell at any time you wish without concerning yourself with the date of record.
 
There is plenty of downside if you are selling them because you need the money. Because if they go down, your calls don't excercise, you don't have the cash, and your shares are not worth as much as what you could have actually sold them for. What do you think you are getting paid the premium for?

I shouldn't need to explain this, but people seem to have "funny" thinking.
Well assuming you are selling because you want to transition into something with less volatility. However if you are doing this just for a pure income perspective, then sell deep deep in the money leaps. You get to extract 50% of what you wanted to sell in premiums. And if those shares are never exercised then holy moly you won the jackpot.
 
There is plenty of downside if you are selling them because you need the money. Because if they go down, your calls don't excercise, you don't have the cash, and your shares are not worth as much as what you could have actually sold them for. What do you think you are getting paid the premium for?

I shouldn't need to explain this, but people seem to have "funny" thinking.
OK, so now you went from "better to sell some shares from time-to-time for living expenses than sell covered calls, because TSLA will go up"
to "you are better off selling shares because TSLA might go down".
Nice move...(of the goal posts)
1660576608132.png
 
Are you saying short babies don't deserve to live?

/s

I had the same thoughts as you, so I looked up the height of babies at walking age. At 14 months babies are still measured by "length" not "height". Girls average 30" long, boys 31" long. I would say the garden gnome was perhaps shorter than that. But it doesn't matter much, I'm sure there are toddlers that height.
This is the actual height of the child VRU (Vulnerable Road User) and can be purchased here (these are specifically designed to meet NCAP/NHTSA testing criteria). I'm going to do some more testing with shorter height and sideways stances as well.

Screenshot 2022-08-15 7.57.05 AM.png
 
I give their chance of survival at around 1% or so. And if they can get their profit margin to be positive, then I'll up that percentage to 10% because thats the same chance Tesla had when their profit margin was positive. Yes it's just that difficult.

And I am assuming their goodwill from Amazon or whoever are used up by then because from current trajectory, they need to burn another at least 20-30b to get there. Let's see how much patience these big guns have.
Tesla was at a very different place in the market. I don't think comparing the investment market in 2012 and 2022 is valid. The expectation was that EVs were always going to be a failure and there wasn't a market for them... Tesla proved that very wrong. Very little big money was available to fund in 2013/14/15/16+... now we have not only a ton from names like Amazon, but from investors looking for that 'next Tesla.' They can secondary a number of times and find plenty out there to fund the company as there is a proven winner in the field.

Rivian currently only has a few billion less cash on hand than Tesla does today. At ~15b they basically have the same cash as Tesla did after a $5b raise in Sept 2020. That is an enormous war chest and should fund everything they have at least through 2024. Which is a longer timeline than Tesla had at any point prior to 2020. Rivian is burning cash like it is going out of style and I don't think that is building a very good culture for longer term margins (I despise the Georgia factory plans)... but it gives them a long leash. If at any point in the next 18 months, they can get production ramped and show improvement in margins... they'll be able to sell the bill of goods that they are past the worst and pretty much any stock can handle some secondary offerings.

My back of the napkin math at IPO was that Rivian really needed at least 23b to get ramped and survive... so I think we are in the same realm there. I think they were/are about 5b short and that was prior to the Georgia plans, so I'm more in the 8b short range now. The 8b will have to come from either improvements in FCF in the near term( 🤣 ), external investment, or a secondary offering (likely a combo)... in this market that is willing to prop up Lucid to a 30b market cap, I don't see how they can't raise 8b if absolutely needed... I mean Nikola is looking at a ~1b offering and finding some traction. That doesn't make them a great investment... but surviving, I think the odds are growing they'll survive.
 
It can also greatly impact your ability to make larger amounts of money by risking your position. That's all I'm saying. If you don't understand this, I'm not going to show you the math. If you can beat the system, more power to you. Just be honest with your boo-boos that cost lost opportunity.


I think the people who do it successfully understand the risk/reward ratio really well. Otherwise they wouldn't be successful. Lost opportunity is not really an issue. You are continuing to hold your long positions and in some cases tapping into leverage to sell puts. This is not about beating the system. It is all about using available tools/strategies and fine tuning an approach based on data and countless hours of ticker watching. Why not get paid if you love watching the ticker on a daily basis.

I will just say that it takes days of learning and months of experience to finally figure out the ideal risk/reward ratio for you.
 
NOTE: Do not write covered calls when the stock price is down! That strategy has a much higher risk of the stockprice appreciating more than 20%. Applies vice versa to puts.

In all of my time in selling calls, this is the biggest lesson. I've been in a roll session twice, both times stemmed from selling in downward patterns that reversed. Neither lasted very long and were fairly easy to roll out of. When you have large green days, that is a very good time to sell calls. The premiums tend to jump and instead of getting ~$.75-1 for something 20% of of the money... you can see $1.50-2 in those spurts.

Selling calls isn't for everyone and I get that... but they can be used quite effectively. I've personally benefitted greatly from them. Now I tend to roll my funds back into Tesla, usually 20% ITM leaps... so in my case, it just keeps building leverage for me. But in this drawdown I've been able to increase my position in Tesla significantly... even with having to cut down a leap as a capital preservation move (it was a leap funded by CCs that I took a loss on).
 
Tesla was at a very different place in the market. I don't think comparing the investment market in 2012 and 2022 is valid. The expectation was that EVs were always going to be a failure and there wasn't a market for them... Tesla proved that very wrong. Very little big money was available to fund in 2013/14/15/16+... now we have not only a ton from names like Amazon, but from investors looking for that 'next Tesla.' They can secondary a number of times and find plenty out there to fund the company as there is a proven winner in the field.

Rivian currently only has a few billion less cash on hand than Tesla does today. At ~15b they basically have the same cash as Tesla did after a $5b raise in Sept 2020. That is an enormous war chest and should fund everything they have at least through 2024. Which is a longer timeline than Tesla had at any point prior to 2020. Rivian is burning cash like it is going out of style and I don't think that is building a very good culture for longer term margins (I despise the Georgia factory plans)... but it gives them a long leash. If at any point in the next 18 months, they can get production ramped and show improvement in margins... they'll be able to sell the bill of goods that they are past the worst and pretty much any stock can handle some secondary offerings.

My back of the napkin math at IPO was that Rivian really needed at least 23b to get ramped and survive... so I think we are in the same realm there. I think they were/are about 5b short and that was prior to the Georgia plans, so I'm more in the 8b short range now. The 8b will have to come from either improvements in FCF in the near term( 🤣 ), external investment, or a secondary offering (likely a combo)... in this market that is willing to prop up Lucid to a 30b market cap, I don't see how they can't raise 8b if absolutely needed... I mean Nikola is looking at a ~1b offering and finding some traction. That doesn't make them a great investment... but surviving, I think the odds are growing they'll survive.
"Different place in the market" does not justify the crazy amount of stock based compensation they are dishing out and the wildly inefficiencies they have in the current factory. COGS right now is at crazy levels, way way way worst than when Elon even admitted "no one has mass manufactured EVs before so we don't know what we are doing". Rivian managed to blow that out of the water. So the question an investor needs to ask is...are they not going to change trajectory because Tesla pivoted away from using too many robots quickly as they were bleeding. Is Rivian just going to report even bigger and bigger COGs next quarter? Will their totally expenses 20x what it is today as they scale up to 1M cars? Tesla's total cost did, what makes you think it wouldn't happen to Rivian? Because they are front loading all the cost for faster scale? Didn't they guide for 1M EVs by 2030, or 9 years after their first EVs rolled off the lot? How is that different from Tesla's ramp because Tesla hit 1M run rate 9 years after the first Model S delivery?
 
@Knightshade , 20% OTM meaning... at a Strike price 20% lower than SP at time of selling those puts? ...or at a premium 20% below the premium at time of sale? (Yeah, I have a lot to learn)...

Is the "Be the House" thread the one I need to go to to learn all this from the beginning?
I am sure he means the first one: selling puts or calls at a strike price that is 20% lower/higher than the SP at time of selling puts/calls.

And yes, the 'Be the House' thread is the place. Come on over; water's warm. Be prepared to spend a lot of time learning. But the folks over there are a good group. I've learned a lot there.