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TSLA as a short term?

Discussion in 'TSLA Investor Discussions' started by tinanbran, Sep 22, 2016.

  1. tinanbran

    tinanbran Member

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    I have some funds that are doing nothing for me right now in a savings account. We are current Tesla owners and are very confident in TESLA as a company, that being said it doesn't matter what I think as far as TSLA shares go. I have a use for most of the funds in about 6-8 months but I have been looking at the TSLA prices and I feel that they are very close to possible profit this upcoming quarter and that would be ahead of expectations and would then in turn drive shares up. What are your thought on a short term investment for a few quarters.....
     
  2. Cattledog

    Cattledog Active Member

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    “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” Benjamin Graham

    Like many here, I am heavily invested in TSLA. I'd like to think that in 6-8 months it will be up, and significantly, but I can't say definitively as I don't know how the markets will vote on TSLA in that time period. Over 6-8 years, I have high confidence Elon's vision will have been prescient, and the markets will weigh that accordingly. Good luck.
     
  3. GoTslaGo

    GoTslaGo Learning Member

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    Some of what I've garnered from following the short term thread.

    Q3 production numbers should be on target and more. Since the market hasn't valued anything with TSLA, SP may pop (I believe it will, but will hedge my comments) after Earnings.

    After Q3, TSLA will do a cap raise for Model 3 which will bring out all the shorts and FUDsters, which will dip the price.

    Q4 and second half of the year should be good. I expect them to meet 50k guidance for 2nd half. I believe TSLA will go up again.

    Also suspect Q4 and 2017 Q1 will begin to show Tesla Energy figures which will boost SP.

    Lots of technicals pointing to potential upswing in SP.

    That being said. The issue will be the merger. SP IMHO is being held down by the uncertainty generated by TSLA/SCTY merger. There may be a run up in price to the merger as shorts are slowly forced to recall (I do not expect a Porsche-VW style short squeeze). Then after the merger there may be a drop as the shares are freed up to be shorted again.

    Hang on to your hats if you plan on using TSLA for short term gains. TSLA famously doesn't seem to like to follow the rules. If you plan on using TSLA for the short term (high risk), you will probably need to follow it closely, develop a good exit strategy (set exit plans) and keep lots of Tums handy.

    I'm long TSLA, with a planned horizon beyond 5 years (figured I will be holding until they start paying dividends...).

    PS--my wife LOVES the model S, I'm sure yours will too!:)
     
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  4. bonaire

    bonaire Active Member

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    #4 bonaire, Sep 24, 2016
    Last edited: Sep 24, 2016
    You can invest by selling short puts OTM for a date just prior to your need. Example, sell Jan 2017 $190 puts for $13. You are only hurt if it goes below $177. If you buy shares and they happen to go down, you lose out on every dollar it falls. You still make pretty good money even if pps stays flat or goes up. It is like hitting lots of singles in baseball rather than trying for home runs all the time and missing.

    It is another way of investing carefully without actually buying stock. Talk to an advisor or trusted fiduciary.

    The OP is In Canada and I don't know if this is possible for you. Perhaps TD Ameritrade offers the US options market to you.

    Pay attention to the US debates and polls. The risk of a Trump presidency implies pressure on both renewables and EV subsidies, perhaps, and could pressure TSLA. There certainly are less risky investments to put cash to work on. Doing the short puts thing on stable dividend stocks is also sometimes "easy money". Investing on favorite stocks or emotionally sometimes can be painful. I see in your picture you show your kids so definitely think of their future when investing. I have risked money in ways that could have risked my kids' future but have learned to stay on course if an emotional bet was drawing me in.
     
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  5. GoTslaGo

    GoTslaGo Learning Member

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    I suspect op would have to sell cash covered puts which from what I understand (could be incorrect), could lock up a lot of cash. I love this idea btw, and intend to try it in the future.

    Agree with last paragraph about less risky options!
     
  6. bonaire

    bonaire Active Member

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    Money is already locked up - as cash. Would basically be a cash margin account to back the short puts. Sometimes, they do not require full value of the put strike to sell them. In high volatility stocks, they do. I found it interesting that some blue chip stocks only have a small percentage of cash backing requirements. Options are scary to some, but many people could benefit by using this "buy stock later through OTM puts" than just buying shares. You do have to watch the market closer to know if you go ITM or not. My account is full of short puts rather than lots of shares. I should have more dividend stocks on board but the risk is downside there.

    Another thing, some folks buy shares but never sell covered calls on their shares and they miss out on more income. Lots of things to increase income and lower cost basis.
     
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  7. GoTslaGo

    GoTslaGo Learning Member

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    Thanks! Great to know!
     
  8. EinSV

    EinSV Member

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    For money that you need in the short-term (6-8 months), I would keep in mind that the NASDAQ hit an ATH last week and the market is priced expensively on many metrics. If there is a downdraft in the market at some point TSLA could get caught up in that even if the company continues to perform well. And at least until Model 3 is up and running at full speed, TSLA will remain vulnerable to periodic FUD attacks and general short seller shenanigans.
     
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  9. anticitizen13.7

    anticitizen13.7 Enemy of the Status Quo

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    My thoughts are: No.

    Because you'll need the cash in 6-8 months, I view putting all of it into TSLA as extremely imprudent given the volatility of TSLA. Over the past 8 months, TSLA has been as high as 265 and as low as 143. This is NOT a stock that is friendly or forgiving to short-term traders, and many people here have gotten burned trying to make a quick buck trading it. Trading should only be done with $ that you are comfortable losing 100%.

    I recommend only investing in TSLA for the long haul (5-10 years). There is just too much uncertainty and random-ness in short term movements.
     
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  10. GoTslaGo

    GoTslaGo Learning Member

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    This is why @bonaire 's idea of selling puts makes sense. Let's use his/her's Jan 17 190 puts for $13 as an example. That would mean the OP would have to keep 19000 available in the cash margin account (what he/she is doing now) making 0.02% interest.

    So this is my understanding of how it works.

    Since the OP sold the puts, OP gets 1300 dollars now (valuation of put/calls x 100 shares, from what I read). So for leaving their money in the cash margin account until January they make 1300 dollars. If it hits by January (price goes down to 190), they are obligated to buy the shares at 190 (plus commission), or buy back their put (possibly losing some money). If the price remains above 190, they keep the 1300 and the 19000 (minus taxes and commissions). Then they could do this again. Fascinating!

    That being said @bonaire's comment about needing less cash for blue chip stocks maybe a better option since they are less volatile to potentially hit the strike price (less likely to need to buy). Need less cash in the account, so more flexible. However I suspect their put price will be lower to account for these variables.
     
  11. bonaire

    bonaire Active Member

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    #11 bonaire, Sep 24, 2016
    Last edited: Sep 24, 2016
    As you describe it, what any investor needs to do is determine if they want to risk buying 100 shares and losing say $1000 for every $10 it goes down, gaining $1000 for every $10 it goes up or simply a "side-bet" of holding $19000 aside and making $1300 to do it - as long as pps stays above 190. If it drops to $180, they are In the Money but are still "up $3" if Jan expiration is $180. That's fine too. If they "held long and strong" the stock from 209 to 180, they lose $2900. If they use stop losses at $200, they lose $900.

    Add to that "spreads, butterflies, condors" and other options craziness to lower risk.

    The options institute offers courses in this area. Also, an online group (the guys who built the ThinkorSwim product) run a company called TastyTrade out of Chicago and offer courses, talk-shows and more online at www.tastytrade.com. They also hired ex tv-talking-head Dylan Ratigan who is "very pro Tesla". He was thrown off MSNBC for speaking his mind.

    Anyway - adding to the TSLA risk is the overall market feeling of what does an integrated SCTY do to TSLA itself. Is it adding cash-flow (from the leases and PPAs) or is it a boat anchor leading to more debt and dilution? That is what makes it risky and why you could earn $1300 just by saying you would buy 100 shares by January of 2017. It is that volatile.

    Which is why some say you would want to avoid it entirely.

    Even though I like EVs, Green Energy and all that, my puts are sold under PSX, BP, THO, SCCO and other stable firms. THO is interesting as it was $49 during the February dip and now $82. That's an RV manufacturer and the trend is up for RV sales among retirees. One of the best short puts I have is Jan 2017 PSX puts sold for $2.95 with strike of $60. They will expire worthless and I keep the value of those sold. If PSX plunges to the $60s, as a liquid stock, you just short "into the strike price" of the lower short put and you're fine. But shorting TSLA is hard due to the borrowing costs.

    What I do if I wanted to make $1300 would be to 20 sell $60 strike Feb 17 puts on PSX for .65, maybe .70. It would only require $19000 in buying power to do that. PSX is a large refinery (yeah, gasoline and other) but until we see a huge change in consumer buying, gasoline is in demand. I doubt PSX drops from $80 to 60 in four months. That is about a 6.3% ROI (pre-tax) on the money risked and it is a STCG. I am not "pro gasoline". I am "pro common sense". For the above, if I really wanted to sell those puts, I would look for a market dip (they move the market around all day) and while dipping, options volatility goes up and you can sell puts at higher prices.

    Warren Buffet invests in BYD (EVs) *and* heavily in PSX. Go figure.

    We already got through the September Fed meeting so banks should be somewhat stable. I used to sell puts on JPM in the past, might do it again soon.

    This is not investment advice. And options trading is (IS) dangerous if you do it wrong. I've been hurt before in bad ways - but learned a lot and recovered. Be careful of analyst and "analyst" calls which can swing the market by triggering algorithmic trader reactions (computers that read the press and adjust trading patterns). TSLA is one of the bigger tennis balls that these market maker guys smack around.

    For the OP - do you trust TSLA, the market and the casino aspects "out there" more than cash sitting in the bank? That's up to you to decide. But remember, wall street is the biggest casino in the world.
     
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  12. anticitizen13.7

    anticitizen13.7 Enemy of the Status Quo

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    The bet is that TSLA will stay above a certain level, and there is no guarantee of that. If TSLA were to plunge to say $120 for some random reason, that $190 put contract would be pretty painful.

    If the OP already has the cash they need for that purchase 6-8 months from now, why rock the boat by being greedy? Weird stuff happens. The whole China market panic dropped TSLA below $150 for no reason directly related to the company.

    I still say stay away from TSLA and options too when one needs a certain level of liquidity 6-8 months out.
     
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  13. bonaire

    bonaire Active Member

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    Agreed. A fund holding a Billion dollars worth of TSLA shares doesn't worry about selling even if it goes down $50/share. Why worry? Not their money ! :)
     
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  14. GoTslaGo

    GoTslaGo Learning Member

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    Hope these comments helped. I believe we all feel that trying to play Tesla when you need the funds in 6-8 months is not a good idea.

    My general rule (I emphasize "my"):

    If you need the funds in less than one year. Stay in cash.

    Over one year one can look into CDs and more conservative investments.

    Longer horizons the options are more open, all depends on your risk tolerance, available funds and understanding of the stock market.
     

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