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Bet TSLA

Active Member
Dec 8, 2014
2,874
10,696
Cupertino, CA
I decided this belongs in this thread rather than the main one, since it's mostly here to demonstrate my psychology when trading around the edges of my core position. I do this mostly because I like gambling, not because it necessarily does any better than buy and hold.

Yesterday (and of course I should have written Thursday rather than Friday):
Me, I sold a bunch of 645 strike 12/24 puts when TSLA was at 630 on the way down. The market informed me I was an idiot, so I wrote a bunch more when TSLA was at 615. Thankfully it didn't go down much more. Breakeven is TSLA 617 at close on Friday. At the moment, both positions are green. If TSLA goes green for the day I'll be quite happy, but I don't think it's likely.

I'll be satisfied if this position just does some to offset all the large down moves in all the others.

Yesterday after the close:
With the return of TSLA to just above 640, the gains on this new position offset all the other down moves, and my account ended up green on the day. Unexpectedly awesome! At least for today.

And today.... When TSLA went green this morning I thought about closing this position, buying back the puts for about $7.50. Nice profit! But I got greedy, figuring TSLA wouldn't go red, so that waiting would cause more premium erosion. I put in a limit order to buy to close for $4. Later I decided it wasn't going to reach that and so I upped it to $4.55.

Just before the close there was a short-lived spike up to $48 or so and my trade executed. Sometimes greed wins!

Of course it's likely this position would have expired worthless tomorrow, and probably below $4, but I didn't feel greedy enough to risk the unknown for another day. So $27.69 -> $4.55 in one day. Gotta love these trades when they work.

But it's worth noting that there were really two trades. The first one was at $21 (TSLA @~630.20) and the second for $32.16 (TSLA @~615.40) for 1.5x the number of contracts. So on the first I made $16.45/share, and on the second I made $27.61/share on 1.5x as many shares, about 2.5x as much. It makes a big difference getting things close to right. It's too bad I don't know how to do that with any consistency.:(
 

Criscmt

Member
Feb 18, 2020
517
1,711
San Francisco
Quick update from me - I also finally gave up on any post-inclusion bump and sold off most of my calls for expiration up to Feb21. If I had made this decision on Monday after seeing @FrankSG blog post and @adiggs post here, I would have done very well. Although I ended up in the green overall, that was mainly due to the options purchased the day after the announcement which were over 2X. The short term speculative ones purchased week before inclusion ended red or worthless. It was the IV crush that seems to have killed any chance of good returns.

Good experience - although at times painful one. In future, I think it would be better to purchase options with a couple of months time rather than the short expirations which lose value really fast. I still have some deep ITM ones for January which were bought pre-split - these I will likely hold till P&D report. Also have LEAPS that are much further out.

With the IV so low, I was thinking of adding more LEAPS instead of shares - was looking at Jan'23 690 or 750 calls.
Any thoughts here on the strategy - Shares or LEAPS?
The price action yesterday and today seem to suggest more buying for the rest of the year, window dressing. Any thoughts?
Paging @adiggs @FrankSG too.
 

ammulder

3P, X ordered
Supporting Member
Apr 11, 2019
1,153
3,963
Philly area
I decided this belongs in this thread rather than the main one, since it's mostly here to demonstrate my psychology when trading around the edges of my core position. I do this mostly because I like gambling, not because it necessarily does any better than buy and hold.

Yesterday:

Me, I sold a bunch of 645 strike 12/24 puts when TSLA was at 630 on the way down. The market informed me I was an idiot, so I wrote a bunch more when TSLA was at 615.​

And today.... When TSLA went green this morning I thought about closing this position, buying back the puts for about $7.50. Nice profit! But I got greedy, figuring TSLA wouldn't go red, so that waiting would cause more premium erosion. I put in a limit order to buy to close for $4. Later I decided it wasn't going to reach that and so I upped it to $4.55.

Just before the close there was a short-lived spike up to $48 or so and my trade executed. Sometimes greed wins!

Of course it's likely this position would have expired worthless tomorrow, and probably below $4, but I didn't feel greedy enough to risk the unknown for another day. So $27.69 -> $4.55 in one day. Gotta love these trades when they work.

But it's worth noting that there were really two trades. The first one was at $21 (TSLA @~630.20) and the second for $32.16 (TSLA @~615.40) for 1.5x the number of contracts. So on the first I made $16.45/share, and on the second I made $27.61/share on 1.5x as many shares, about 2.5x as much. It makes a big difference getting things close to right. It's too bad I don't know how to do that with any consistency.:(

So if I get this right, on a morning when the TSLA share price was sinking pretty strongly, TSLA was at $615, and you sold a $645 put for $32, meaning you were pretty likely to be assigned the shares, and if it continued going down even $2 more by the end of the next day or two you'd have lost money (not counting what those shares might have done in the future)?

I don't understand the thinking, unless you wanted to buy shares anyway. If you were somehow confident that you had caught the bottom of the daily or weekly dip at $615, can you explain why? I guess even if I believed TSLA wouldn't sink much below $615 (which is plausible), I wouldn't have had much confidence it would get back above $645 in the remainder of the week, so I would have expected a serious risk of getting the shares assigned and needing to bother with flipping them and relying on some portion of the premium to make this exercise profitable.

So clearly this trade worked out for you. I guess I'm wondering, did you have more confidence in a share price recovery? Or were you perfectly willing to get share assigned? What am I missing?
 

juanmedina

Active Member
Mar 31, 2016
2,305
6,018
SC
So if I get this right, on a morning when the TSLA share price was sinking pretty strongly, TSLA was at $615, and you sold a $645 put for $32, meaning you were pretty likely to be assigned the shares, and if it continued going down even $2 more by the end of the next day or two you'd have lost money (not counting what those shares might have done in the future)?

I don't understand the thinking, unless you wanted to buy shares anyway. If you were somehow confident that you had caught the bottom of the daily or weekly dip at $615, can you explain why? I guess even if I believed TSLA wouldn't sink much below $615 (which is plausible), I wouldn't have had much confidence it would get back above $645 in the remainder of the week, so I would have expected a serious risk of getting the shares assigned and needing to bother with flipping them and relying on some portion of the premium to make this exercise profitable.

So clearly this trade worked out for you. I guess I'm wondering, did you have more confidence in a share price recovery? Or were you perfectly willing to get share assigned? What am I missing?

Did he sell a bunch of shares at $400 because he thought the SP was going lower? he is probably sitting on a lot cash.
 

ReddyLeaf

Active Member
Mar 19, 2014
1,799
3,360
WA State
I don’t pretend to know much, but since @Bet TSLA put wasn’t assigned, it looks to me like the MM doesn’t want to give up any shares. Perhaps lots of EOY buying for window dressing as stated above by @Criscmt. Thanks for the lesson, but this is clearly beyond next level stuff for me. You have resources beyond most.
 
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Davidzhao365

Supporting Member
Supporting Member
Dec 13, 2019
131
943
San Francisco
Need some advice (thoughts).
I am at 60% shares and 40% leap, the leap is Jun 22 $600 call, more like ATM.

My intuitive thought is to adjust to
  • 60% shares
  • 30% Jun22 $600 call (18 month out)
  • add 10% Jun21 $600 call (6 month out).
This is to slightly increase the leverage by adding Jun21 $600 (6 month out) call. And I plan to roll this 6 month call every 2 - 3 month, to keep a buffer from expiration.

An conservative idea is to convert more Leap to shares, say 80% shares and 20% leaps, or even 100% shares (like @FrankSG) . This way it is really stress free and I can leverage up when the next crash happens (if it happens at all).

Any thoughts? Has anyone had a portfolio with a lot of Leaps? How was it for a longer period of time? Say, 1 to 2 years.
I am fairly new to options, only started since Dec 2019.
 

adiggs

Active Member
Sep 25, 2012
4,843
14,291
Portland, OR
The price action yesterday and today seem to suggest more buying for the rest of the year, window dressing. Any thoughts?
Paging @adiggs @FrankSG too.

I have a guess, informed by nothing more informed than my gut.

The net position for me being biased towards the upside, where we've been going recently. And I'm still expecting more like upper 500s sometime in Jan or Feb; the delay to Feb would be due to buy-the-rumor, sell-the-news around Q4 earnings and 2021 expectations (should it wait for then).

That may be my newfound conservatism talking :)


Reason why - clueless.
 
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Mo City

Active Member
Jul 17, 2016
1,910
11,672
near Houston
Need some advice (thoughts).
I am at 60% shares and 40% leap, the leap is Jun 22 $600 call, more like ATM.

My intuitive thought is to adjust to
  • 60% shares
  • 30% Jun22 $600 call (18 month out)
  • add 10% Jun21 $600 call (6 month out).
This is to slightly increase the leverage by adding Jun21 $600 (6 month out) call. And I plan to roll this 6 month call every 2 - 3 month, to keep a buffer from expiration.

An conservative idea is to convert more Leap to shares, say 80% shares and 20% leaps, or even 100% shares (like @FrankSG) . This way it is really stress free and I can leverage up when the next crash happens (if it happens at all).

Any thoughts? Has anyone had a portfolio with a lot of Leaps? How was it for a longer period of time? Say, 1 to 2 years.
I am fairly new to options, only started since Dec 2019.
I love your current position and wouldn't touch Jun21 calls with a 10-foot pole without a specific reason. In a 6-month period, TSLA could slump or be flat. Over 18-24 months, you are very likely on profitable, solid ground. Outperforming HODLing with LEAPS is good enough for me.

If you prefer being more active, holding more shares in order to pounce on dips makes a lot of sense. This is where I currently sit.
 

Runarbt

Active Member
Mar 1, 2013
1,126
4,156
Drammen, Norway
Need some advice (thoughts).
I am at 60% shares and 40% leap, the leap is Jun 22 $600 call, more like ATM.

My intuitive thought is to adjust to
  • 60% shares
  • 30% Jun22 $600 call (18 month out)
  • add 10% Jun21 $600 call (6 month out).
This is to slightly increase the leverage by adding Jun21 $600 (6 month out) call. And I plan to roll this 6 month call every 2 - 3 month, to keep a buffer from expiration.

An conservative idea is to convert more Leap to shares, say 80% shares and 20% leaps, or even 100% shares (like @FrankSG) . This way it is really stress free and I can leverage up when the next crash happens (if it happens at all).

Any thoughts? Has anyone had a portfolio with a lot of Leaps? How was it for a longer period of time? Say, 1 to 2 years.
I am fairly new to options, only started since Dec 2019.

Not sure I woulf be comfortable with $600 call. :-/

I am 70% share and 30% deep itm calls. $200 july21, will roll these after q4.

Love that there are hardly any timevalue on these.
 
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Davidzhao365

Supporting Member
Supporting Member
Dec 13, 2019
131
943
San Francisco
Not sure I woulf be comfortable with $600 call. :-/

I am 70% share and 30% deep itm calls. $200 july21, will roll these after q4.

Love that there are hardly any timevalue on these.

I just rolled all deep ITM calls to $600 in the past 3 months :).
What is your target parameter for the next rolling after q4?
 
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FrankSG

Active Member
Jun 27, 2019
1,615
21,504
Singapore
The price action yesterday and today seem to suggest more buying for the rest of the year, window dressing. Any thoughts?
Paging @adiggs @FrankSG too.

No idea. I haven't really checked the stock for a few days.

Need some advice (thoughts).
I am at 60% shares and 40% leap, the leap is Jun 22 $600 call, more like ATM.

My intuitive thought is to adjust to
  • 60% shares
  • 30% Jun22 $600 call (18 month out)
  • add 10% Jun21 $600 call (6 month out).
This is to slightly increase the leverage by adding Jun21 $600 (6 month out) call. And I plan to roll this 6 month call every 2 - 3 month, to keep a buffer from expiration.

An conservative idea is to convert more Leap to shares, say 80% shares and 20% leaps, or even 100% shares (like @FrankSG) . This way it is really stress free and I can leverage up when the next crash happens (if it happens at all).

Any thoughts? Has anyone had a portfolio with a lot of Leaps? How was it for a longer period of time? Say, 1 to 2 years.
I am fairly new to options, only started since Dec 2019.

I had a lot of leaps from late 2019 to the S&P inclusion, as you know.

I think it's pretty obvious that TSLA will never see another year like 2020 again, and although I think it could continue to rise slowly and steadily from $650, I'm not confident enough leaps will beat stock (by much).

Furthermore, there are various risks involved, such as new tax laws, higher interest rates, macro crises, etc. etc. So I'm keeping 100% of my money in stock for now. Perhaps if there are large dips, or if leaps become cheaper after the stock stays flat for a long time, maybe then I'll reconsider buying some leaps.

Even then though, I doubt I'll ever invest as heavily in leaps as I have throughout 2020, because I doubt TSLA will ever go through the same revaluation again. Perhaps FSD could have a big impact at some point, but it's a total gamble imo when the market will properly value this, and it might be a slow process spread out over time.
 

Bet TSLA

Active Member
Dec 8, 2014
2,874
10,696
Cupertino, CA
So if I get this right, on a morning when the TSLA share price was sinking pretty strongly, TSLA was at $615, and you sold a $645 put for $32, meaning you were pretty likely to be assigned the shares, and if it continued going down even $2 more by the end of the next day or two you'd have lost money (not counting what those shares might have done in the future)?

I didn't write these puts to get shares assigned, I wrote them to make money by buying them back for less than I sold them. So I wasn't about to let them expire in the money. When I wrote the first batch of puts at 630ish it was because I thought TSLA had reached its bottom for the day. I was very wrong. When I wrote the second batch of puts at 615ish it was because I thought TSLA had reached its bottom for the day. That time I was more or less right.

Although by that time the first batch was a seriously losing position. I wrote 1.5x as many contracts the second time to drag the break-even down from ~624 all the way to ~617. I felt fairly confident that TSLA would close the week above 620.

I don't understand the thinking, unless you wanted to buy shares anyway. If you were somehow confident that you had caught the bottom of the daily or weekly dip at $615, can you explain why? I guess even if I believed TSLA wouldn't sink much below $615 (which is plausible), I wouldn't have had much confidence it would get back above $645 in the remainder of the week, so I would have expected a serious risk of getting the shares assigned and needing to bother with flipping them and relying on some portion of the premium to make this exercise profitable.

No. This was just a trade. If I didn't make money on it then I would lose money. So what? If I get assigned the shares, so what? I can just sell them. The game is to make more good trades than bad trades and make money in the aggregate. In this case I thought that TSLA, in the inclusion aftermath, would get beat up a bit and then recover to maybe 650 by the end of the week.

So, as we know now, I got the shape of things right but the endpoints wrong, the bottom one the first time, and the top one to close the week. As it turned out, I could have made another $4.55 by letting the position expire worthless. The nice thing about selling puts is that you can make money even when you are fairly wrong. That's harder with buying calls because the premium is a cost rather than a benefit. And I don't like selling calls because it's a bearish bet.

So clearly this trade worked out for you. I guess I'm wondering, did you have more confidence in a share price recovery? Or were you perfectly willing to get share assigned? What am I missing?

I think what you're missing is that I treat this as gambling and was willing to take a serious risk of a loss. If you insist on safety, stick to buy and hold. This is not safe. If you only bet on sure things then there isn't much money to be made.

Did he sell a bunch of shares at $400 because he thought the SP was going lower? he is probably sitting on a lot cash.

You seem to be seriously confused by something. Not sure what.

I don’t pretend to know much, but since @Bet TSLA put wasn’t assigned, it looks to me like the MM doesn’t want to give up any shares. Perhaps lots of EOY buying for window dressing as stated above by @Criscmt. Thanks for the lesson, but this is clearly beyond next level stuff for me. You have resources beyond most.

This has nothing to do with anything you're thinking here. It's simply trading going the way it usually goes. Nothing gets assigned because at no point is it profitable to assign anything.
 

Davidzhao365

Supporting Member
Supporting Member
Dec 13, 2019
131
943
San Francisco
No idea. I haven't really checked the stock for a few days.



I had a lot of leaps from late 2019 to the S&P inclusion, as you know.

I think it's pretty obvious that TSLA will never see another year like 2020 again, and although I think it could continue to rise slowly and steadily from $650, I'm not confident enough leaps will beat stock (by much).

Furthermore, there are various risks involved, such as new tax laws, higher interest rates, macro crises, etc. etc. So I'm keeping 100% of my money in stock for now. Perhaps if there are large dips, or if leaps become cheaper after the stock stays flat for a long time, maybe then I'll reconsider buying some leaps.

Even then though, I doubt I'll ever invest as heavily in leaps as I have throughout 2020, because I doubt TSLA will ever go through the same revaluation again. Perhaps FSD could have a big impact at some point, but it's a total gamble imo when the market will properly value this, and it might be a slow process spread out over time.

I just took a ride using FSD Beta with Vincent (twitter), and decided to keep all my calls after the first left turn :)
It is amazing. Taking a ride is very different from watching Youtube videos. If you can get a chance, I highly recommend you try it.

Given the iteration speed I think Tesla will be the first to solve the FSD in a large scale and in most common areas. (not small fleet in a particular area)
 

ammulder

3P, X ordered
Supporting Member
Apr 11, 2019
1,153
3,963
Philly area
When I wrote the first batch of puts at 630ish it was because I thought TSLA had reached its bottom for the day. I was very wrong. When I wrote the second batch of puts at 615ish it was because I thought TSLA had reached its bottom for the day. That time I was more or less right.

OK, this is the part I had missed. It makes more sense that you were trying to sell puts at the bottom for the day.

If I was willing to bet on a breakeven of $617, I think I'd be more inclined to sell $615 puts. But I see that a somewhat out of the money put is perhaps $10/sh whereas your somewhat in the money puts were $20-30/sh... so you were counting on a higher close, and in turn expecting 2-3x the profit if all went as expected with the $650 close. I guess the difference is, when the price was sinking early on, I didn't have that confidence that it would close back up above $650 for the week... I figured maybe $620-630. So your superior insight paid off. :)
 

Bet TSLA

Active Member
Dec 8, 2014
2,874
10,696
Cupertino, CA
OK, this is the part I had missed. It makes more sense that you were trying to sell puts at the bottom for the day.

If I was willing to bet on a breakeven of $617, I think I'd be more inclined to sell $615 puts. But I see that a somewhat out of the money put is perhaps $10/sh whereas your somewhat in the money puts were $20-30/sh... so you were counting on a higher close, and in turn expecting 2-3x the profit if all went as expected with the $650 close. I guess the difference is, when the price was sinking early on, I didn't have that confidence that it would close back up above $650 for the week... I figured maybe $620-630. So your superior insight paid off. :)

"If I was willing to bet on a breakeven of $617, I think I'd be more inclined to sell $615 puts."

Well, that's certainly the safer play. Generally I'm selling short-term puts to make money on the stock going up, with the premium being a cushion for bad judgment. Selling lower strike puts gets you more premium, but less potential gain. Of course you can just sell more contracts, but that comes with the risk or more loss if the trade goes sour.

"So your superior insight paid off."

Ha! I would call it superior luck. This time. The big problem with writing puts is that if the stock goes down rapidly you can lose a lot of money very quickly. I've certainly done this sort of thing where it was an oops it's going down more than I thought, so I doubled my bet and it went down more and faster. Those trades are deadly, and my worst ones were scary awful, wiping out the gains from dozens of successful trades.
 
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djy

Member
Feb 4, 2013
33
352
Santa Barbara
Any thoughts? Has anyone had a portfolio with a lot of Leaps? How was it for a longer period of time? Say, 1 to 2 years.
I am fairly new to options, only started since Dec 2019.

I’ve always been a long term share HODLer with call options on the side of various time expiry’s depending on pending catalysts, but I have considered going from shares to LEAPs before.
If I’m not mistaken, didn’t TSLA investors who were in all LEAPs from 2014 to early 2019 get crushed during this period when the stock was pretty much flat? After the recent run up, I wouldn’t be surprised if we are range bound again for a little bit (but not another 5 years!).
 

Runarbt

Active Member
Mar 1, 2013
1,126
4,156
Drammen, Norway
I’ve always been a long term share HODLer with call options on the side of various time expiry’s depending on pending catalysts, but I have considered going from shares to LEAPs before.
If I’m not mistaken, didn’t TSLA investors who were in all LEAPs from 2014 to early 2019 get crushed during this period when the stock was pretty much flat? After the recent run up, I wouldn’t be surprised if we are range bound again for a little bit (but not another 5 years!).

Solution is to go deep ITM with calls, not otm Leaps. Those are dangerous when sp goes sideways.

With deep ITM calls, like $200-300, you still get a pretty nice leverage compared to owning just shares but hardly no time value cost. These behave like shares, for th emost part.

Only thing which will hurt these, is if we get a 50%+ drop, and SP gets close to call value.. which may happen, but I dont think so. If we are to drop 50%, my guess it is from a far higer sp peak.
 

saniflash

Member
Sep 5, 2017
376
3,589
Zurich, Switzerland
Only thing which will hurt these, is if we get a 50%+ drop, and SP gets close to call value.. which may happen, but I dont think so. If we are to drop 50%, my guess it is from a far higer sp peak.

I would hazard the guess and say that if they were ITM pre-correction with an expiration long out in the future, you'd still be able to roll them to maintain most of your investment
 
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