trading

[ev-enthusiast]

Quite some volatility these days.

 

[ev-enthusiast]

Anybody putting in a small trade around the first deliveries of Model Y?
I could imagine there are quite a lot of people currently short TSLA, any positive surprise could be a nice setup for a short term fireworks.
Or is this too risky given macro, thoughts?

Long term I could imagine starting to think about adding shares at these levels.
Depending on one's expectations about the time horizon of this maladie spreading around the globe (and causing to either production or demand of Tesla serious issues).

 

[ev-enthusiast]

I could imagine Tesla to return back to its old trading channel. This is exceptional times.

 

[FrankSG]

I could imagine Tesla to return back to its old trading channel. This is exceptional times.

Maybe, but I can't imagine it staying there for super long. Tesla is purely trading off of corona macros right now. Eventually there will be a point when Tesla's fundamentals will dictate its SP once again. This could take weeks, months, perhaps even a year, but eventually it will trade off of fundamentals again.

For the record, we've finally dropped enough for option premiums to be attractive to me again. I have a portion of my shares that I'm willing to exchange for options at the right prices, and I think I'll be converting 1/3 of those to options today. I'm looking at some relatively low risk long term options with Jun'22 expiration. I'll probably go for either the $700 or $800 strike. I'm going for long term, because I have to admit I don't understand the virus or crisis like this well enough to confidently predict that we'll be back to old levels by the end of the year.

I'm still holding some Jun'21 $900s, which I could see not going into the money if this crisis turns out to be really bad and lengthy, and affects Tesla a fair bit.
I'm also holding a bunch of Jan'22 $500s, which I'm fairly confident should be safe from this crisis. I reckon that by Jan'22 TSLA at least should be trading a couple hundred dollars higher again compared to where we're at today.
I also have a big bunch of Jun'22 $990s, which I'm also not too worried about, because I can't imagine the crisis keeping TSLA down for that long.

Super worst case, I still have all my shares to fall back, but let's hope that doesn't happen, because it'd be a bit painful

 

[FrankSG]

Maybe, but I can't imagine it staying there for super long. Tesla is purely trading off of corona macros right now. Eventually there will be a point when Tesla's fundamentals will dictate its SP once again. This could take weeks, months, perhaps even a year, but eventually it will trade off of fundamentals again.

For the record, we've finally dropped enough for option premiums to be attractive to me again. I have a portion of my shares that I'm willing to exchange for options at the right prices, and I think I'll be converting 1/3 of those to options today. I'm looking at some relatively low risk long term options with Jun'22 expiration. I'll probably go for either the $700 or $800 strike. I'm going for long term, because I have to admit I don't understand the virus or crisis like this well enough to confidently predict that we'll be back to old levels by the end of the year.

I'm still holding some Jun'21 $900s, which I could see not going into the money if this crisis turns out to be really bad and lengthy, and affects Tesla a fair bit.
I'm also holding a bunch of Jan'22 $500s, which I'm fairly confident should be safe from this crisis. I reckon that by Jan'22 TSLA at least should be trading a couple hundred dollars higher again compared to where we're at today.
I also have a big bunch of Jun'22 $990s, which I'm also not too worried about, because I can't imagine the crisis keeping TSLA down for that long.

Super worst case, I still have all my shares to fall back, but let's hope that doesn't happen, because it'd be a bit painful

I went for the Jun'22 $750 strike price @ $90 a piece. I didn't get many, but just a small leverage up. If we drop to low $400s, or even $300s, I have 2 more chunks of shares I'm willing to convert to long term options.

 

[anthonyj]

I could imagine Tesla to return back to its old trading channel. This is exceptional times.

I hated that $250-$380 trading channel. It felt like being smothered with a pillow

 

[jeewee3000]

Super worst case, I still have all my shares to fall back, but let's hope that doesn't happen, because it'd be a bit painful

I'm holding JUN22 LEAPS with strikes of $1000, $1200 and $1800.

Even before COVID I wasn't planning on holding them to expiration. IF the crisis persists longer than expected (i.e. no market recovery before JUN21) I will roll forward all my LEAPS using extra cash (plenty of time to save up until then).

Converting shares to LEAPS right now is on my mind, but I'm waiting a bit more. Not necessarily for the SP to drop, but for the IV to drop and for the lockdowns having lasted at least a week.

Basically: this week I'm not doing anything, next week I'll take a closer look.

I hope we flatline for a week or two around these prices, that would help bring IV down.

 

[FrankSG]

I hope we flatline for a week or two around these prices, that would help bring IV down.

How likely is it that this would reduce IVs? Do market makers calculate IV purely off of recent stock movements?

Just by looking at option premiums, it 'feels' to me like these new IVs are here to stay because market makers look at TSLA differently than before.

The biggest data point that suggests this to me are my Jun'21 $900s and Jun'22 $990s. I bought these for $21.5 and $31.5 respectively when SP was around $490-520 when TSLA was up 50% in only about 2-3 weeks.

Today, TSLA SP is much lower @ $450, but these options are still trading for $41 and $60, basically double what I originally paid for them. And it's not like TSLA had been 'flatlining' in the weeks prior to when I originally bought them.

 

[FrankSG]

Swapped another 1/6 of the shares I'm willing to convert to options. This time I went for the Jun'22 $700 Call @ $82.

So now I've converted 1/2 of the shares I'm willing to convert. Probably would convert the rest if we somehow hit low 300s.

 

[ev-enthusiast]

Closed some short term bets around a Fremont shut down scenario at a gain, no need to be greedy.
Still think there is some probability for Fremont to be shut down during the next days/weeks. No new positions yet.
Thoughts?

 

[junas]

Swapped another 1/6 of the shares I'm willing to convert to options. This time I went for the Jun'22 $700 Call @ $82.

So now I've converted 1/2 of the shares I'm willing to convert. Probably would convert the rest if we somehow hit low 300s.

May I ask is your initial plan to convert Jun'22 $700s and Jun'22 $990s back to shares at certain price levels or roll them forward? At what price level would you do that in case company fundamentals remain strong and TSLA volatility remains high? Let's assume in my question that stock price breaks ATH levels well before that '22 expiry.

I'm currently trying to find alternative ways to leverage my position without cash margin. In other words, I'm probably converting some shares to options and/or shorting TSLA competitors. My plan is to convert back to 100% shares in few steps once this crisis is clearly over. The hardest part is to decide few optimal strikes for different risk scenarios. Also, I rather plan my convert-back-to-shares levels in advance to lock gains systematically. Just trying to validate my strategy a bit.

 

[FrankSG]

May I ask is your initial plan to convert Jun'22 $700s and Jun'22 $990s back to shares at certain price levels or roll them forward? At what price level would you do that in case company fundamentals remain strong and TSLA volatility remains high? Let's assume in my question that stock price breaks ATH levels well before that '22 expiry.

I'm currently trying to find alternative ways to leverage my position without cash margin. In other words, I'm probably converting some shares to options and/or shorting TSLA competitors. My plan is to convert back to 100% shares in few steps once this crisis is clearly over. The hardest part is to decide few optimal strikes for different risk scenarios. Also, I rather plan my convert-back-to-shares levels in advance to lock gains systematically. Just trying to validate my strategy a bit.

The most important advice I can give you is to calculate all your trades in # of shares rather than in $ values. Like if the Jun'22 $1,500s were trading for $100 right now, and you believed SP would go to $2,000 by then, you might think that's a great trade that will net you 5x your money if things go well, however, SP would also increase 5x, so in terms of # of shares you wouldn't gain anything, and the shares are much lower risk.

Right now it's hard to say exactly when I will convert my options back to shares, because there's a lot of uncertainty about how the virus-crisis will impact Tesla's business. But to give you an example, even though before this crisis started I was expecting TSLA to likely go to $1,500-$2,000, perhaps higher, by Jan'22, I was planning to sell my Jan'22 $500s when SP hit ~$1,000-1,100 for 60 shares a piece*. The reasoning for this was that even if SP went to $2,000 by Jan'22, $500 strike price options would only be worth about 75 shares each**, so 25% upside in that scenario. However, in case of a large drop I'm able to use shares to take advantage of new options deals. Sadly, we didn't quite reach the point where I was planning to convert my Jan'22 $500s, so I am still holding onto them, but that was the plan.

The options I'm currently holding, it's going to depend on various factors when I will convert them to shares. The more shares they are worth, the more sense it makes to convert them to shares, because an option will never be worth more than 100 shares, so upside becomes less, whereas downside risk always remains, especially as you get closer to expiration.

It's also going to depend on how leveraged I personally am. If we go back above ATH before the end of this year, I'll likely convert my Jan'22 $500s the soonest because of reasons listed above. When I do so, that'll deleverage me a lot, a lot larger portion of my portfolio will be shares, and therefore I'll be slightly more willing to take risks with and hold onto other options longer.

I don't know if I'll roll forward any options in the next 1-2 years. Even before the virus-crisis, I was of the opinion that based solely on fundamentals, it wasn't super likely for TSLA to go far above $2,000 by early 2022. Possible, but it'd require insane execution, the market to attach a high value to autonomy, or the market to attach a very high valuation multiple to TSLA that I'm uncomfortable betting on. Given this opinion of mine and recently very high IVs and option premiums, none of the $1,000+ strike price options looked particularly appealing to me. Perhaps if SP shoots up a lot, and I deleverage somewhat, I'd want to make a smaller 'bet' on the market waking up to autonomy's potential, and try to buy some Jan'23 $2,000s or something, but as of right now I have no plans for this as I'm leveraged more than enough for my personal goals.

*Jan'22 $500s would probably trade at 550-600$ a piece when SP is $1,000, so be worth 55-60 shares.

**$500 strike price options are worth $1,500 each if SP is $2,000 upon expiration. This means you can convert them to 75 shares each.

 

[junas]

Thank you for detailed answer and easy to understand examples.

I was initially planning a range of 600-1200 strikes (most likely '22 expiries). Probably going to start by buying 600-800 strikes before Q1 p&d report and buying lottery strikes later if we keep going down. I'm not instantly reaching the leverage level I was targeting, but I fully agree what you said about risk&reward ratio of higher strikes. Seems like high IVs and option premiums are unfortunately here to stay. Thank you again for your help and please let us know your future moves too.

 

[Blucenturion]

Def have to go to Vegas when things settle down; I bought back in, 50 shares today and missed the bottom by only $2.15. i.e., 5 mins.

 

[ev-enthusiast]

Just a thought: Once we see some defaults of small business this could be a bottom.

 

[juanmedina]

The most important advice I can give you is to calculate all your trades in # of shares rather than in $ values. Like if the Jun'22 $1,500s were trading for $100 right now, and you believed SP would go to $2,000 by then, you might think that's a great trade that will net you 5x your money if things go well, however, SP would also increase 5x, so in terms of # of shares you wouldn't gain anything, and the shares are much lower risk.

Right now it's hard to say exactly when I will convert my options back to shares, because there's a lot of uncertainty about how the virus-crisis will impact Tesla's business. But to give you an example, even though before this crisis started I was expecting TSLA to likely go to $1,500-$2,000, perhaps higher, by Jan'22, I was planning to sell my Jan'22 $500s when SP hit ~$1,000-1,100 for 60 shares a piece*. The reasoning for this was that even if SP went to $2,000 by Jan'22, $500 strike price options would only be worth about 75 shares each**, so 25% upside in that scenario. However, in case of a large drop I'm able to use shares to take advantage of new options deals. Sadly, we didn't quite reach the point where I was planning to convert my Jan'22 $500s, so I am still holding onto them, but that was the plan.

The options I'm currently holding, it's going to depend on various factors when I will convert them to shares. The more shares they are worth, the more sense it makes to convert them to shares, because an option will never be worth more than 100 shares, so upside becomes less, whereas downside risk always remains, especially as you get closer to expiration.

It's also going to depend on how leveraged I personally am. If we go back above ATH before the end of this year, I'll likely convert my Jan'22 $500s the soonest because of reasons listed above. When I do so, that'll deleverage me a lot, a lot larger portion of my portfolio will be shares, and therefore I'll be slightly more willing to take risks with and hold onto other options longer.

I don't know if I'll roll forward any options in the next 1-2 years. Even before the virus-crisis, I was of the opinion that based solely on fundamentals, it wasn't super likely for TSLA to go far above $2,000 by early 2022. Possible, but it'd require insane execution, the market to attach a high value to autonomy, or the market to attach a very high valuation multiple to TSLA that I'm uncomfortable betting on. Given this opinion of mine and recently very high IVs and option premiums, none of the $1,000+ strike price options looked particularly appealing to me. Perhaps if SP shoots up a lot, and I deleverage somewhat, I'd want to make a smaller 'bet' on the market waking up to autonomy's potential, and try to buy some Jan'23 $2,000s or something, but as of right now I have no plans for this as I'm leveraged more than enough for my personal goals.

*Jan'22 $500s would probably trade at 550-600$ a piece when SP is $1,000, so be worth 55-60 shares.

**$500 strike price options are worth $1,500 each if SP is $2,000 upon expiration. This means you can convert them to 75 shares each.

Is there a calculator to figure out when is the optimal price to sell the options at? I am new to this and I bought Jun'22 $750s.

 

[willow_hiller]

Is there a calculator to figure out when is the optimal price to sell the options at? I am new to this and I bought Jun'22 $750s.

Do you have a trading platform with access to the greeks?

Theta should tell how how much time-value you can expect to lose every day. Delta should tell you how your option price will change with respect to the underlying. Gamma should tell you how Delta will change with respect to the underlying.

If you have an educated guess at how the underlying will move over time, you should be able to work out your option price over time using the variables above.

(Price in time T) = (Price in time t) - (theta * (T-t)) + (((gamma * change in underlying ) + delta) * change in underlying) roughly...

 

[FrankSG]

Is there a calculator to figure out when is the optimal price to sell the options at? I am new to this and I bought Jun'22 $750s.

Your brain

There are factors that should go into this calculation that noone but you knows. Such as your goals, your risk tolerance, your expectation for the company's SP, etc.

If you mean the # of shares an option is worth, I don't know if there is a calculator for that, but it's not too hard to calculate by yourself. Just multiply the value of the option by 100, and divide by current SP.

In the case of options with a $500 strike price, and a $2,000 SP upon expiration, the option will be worth $1,500, times 100 is $150,000, divided by $2,000 is 75 shares.

In the case of options with a $500 strike price, and a $1,000 SP upon expiration, the option will be worth $500, times 100 is $50,000, divided by $1,000 is 50 shares.

In the case of options with a $500 strike price, and a $750 SP upon expiration, the option will be worth $250, times 100 is $25,000, divided by $750 is ~33 shares.

In the case of options with a $500 strike price, and a $625 SP upon expiration, the option will be worth $125, times 100 is $12,500, divided by $625 is 20 shares.

 

[EV forever]

Is there a calculator to figure out when is the optimal price to sell the options at? I am new to this and I bought Jun'22 $750s.

I am also relatively new at trading options. I don't think any calculator can tell you the optimal price to sell options. But there are calculators to estimate hypothetical profit loss at different times and underlying stock price.

A free site that you can play around with is Options profit calculator. One option of your Jun'22 $750s would look like this TSLA Long call (bullish) calculator You can start with hypothetical calculations on simple call options or put options and then go on to try the complicated strategies later. I have found the site useful to understand the more complex strategies that folks discuss here. As for myself, I have only traded call options with my money and done reasonably well.

Another alternative is to check your broker website - usually they will have a calculator. For e.g. Fidelity has a P/L calculator under the options tab, which is useful as well, although I prefer the optionsprofitcalculator instead for just checking hypothetical trades

If you are new at this, trade only with money that you can afford to lose. Several of my initial call option trades early on resulted in options expiring worthless. Also remember that unless it is a tax deferred account, there are tax consequences to your trades.

 

[ev-enthusiast]

My thesis is that this corona desaster is getting worse before it is getting better.
Taking a look at Wuhan in China or Lombard region in Italy is like a time machine.
Now exponential growth is happening in France, Spain, Germany and other regions.
Some other regions that had their first corona cases later will realize later what is acutally going on.
Sold some trading shares and short term calls from a boucne trade from the 200DMA on Friday.
I could imagine the bounce was as well a technical move because of big options expiry.
Bought some short term puts on Friday as protection for my core shares.
Will keep for this and next week
Good luck all.