TSLA Investor Discussions

[smorgasbord]

The problem with TSLA options is the bid-ask spread controlled by the market maker is huge.

Isn't the real problem the low volumes for non-near-term options? If there was sufficient volume, the market maker wouldn't have the power.

I stick with straight calls. Notice when TSLA moves higher into the strike, the ask price barely moves higher, but the market maker raises the bid price to simply squeeze the range.

There's not much demand for Calls. Puts are where the action is, I think because that's what the Shorters have available. There are no more shares to borrow, so they buy Puts to accomplish much the same thing. They're expecting TSLA to drop, which would make their Puts worth more. I'm happy to sell Puts to them and either take their money outright, or end up buying more TSLA at cheap prices. And, I've been using the money from the Puts to pay for the Calls I'm buying, which means I get free Synthetic Longs.

With Puts paying so well it makes sense for me to do Syn Longs - selling Puts to pay for the Calls. I was just wondering if the more risk-adverse BCS/BPS might be another way to play an advance in Tesla. I know people using BCS (Bull Call Spreads) in AAPL right now, for instance.

On the Syn Longs, I'm currently thinking of doing a Jan 2015 $35 Put/$28 Call. I can get into that and get paid about $2/share, and should TSLA be $40 in 2 years, I'll be making about $14/share total. That's twice the profit compared to buying today at $33, and requires no money up front. I wouldn't start losing money until TSLA drops below $30.50. At $28 I'd be down $5/share, which is about what you'd be down if you bought the stock today and held.

A more risk-adverse Syn Long is the $28 Put/$35 Call, which is free to start and has no loses above $28 but doesn't start making money until TSLA is above $35. BTW, if Tesla skyrockets and you want to stay along for the ride, you simply exercise the Call and buy the stock at $28 2 years from now.

However, I don't want to over-expose myself on a potential drop in Tesla, which is why I was thinking some low-risk BCSs might also be a good strategy. I guess I just need to find a good BCS/BPS analysis tool.

 

[kenliles]

Isn't the real problem the low volumes for non-near-term options? If there was sufficient volume, the market maker wouldn't have the power.

Well yes that's the real problem (note the spreads are huge even for the highest volume LEAPS). In the end, I agree more volume would cut the power of the m-maker but waiting for that to happen means waiting for the stock price to go up and/or shorts to clear which defeats the purpose of today's purchased bull spread since it will have to absorb that before making profit (even more than the straight call since the spread forces a ceiling on e eventual profit)

There's not much demand for Calls. Puts are where the action is, I think because that's what the Shorters have available. There are no more shares to borrow, so they buy Puts to accomplish much the same thing.
With Puts paying so well it makes sense for me to do Syn Longs - selling Puts to pay for the Calls.

Yes generally I really like your synthetic long strategy. For some maybe just a Put sell works better (with appropriate margin coverage)

I was just wondering if the more risk-adverse BCS/BPS might be another way to play an advance in Tesla. I know people using BCS (Bull Call Spreads) in AAPL right now, for instance.

Yes true, but again the huge difference is the spreads in APPL for both calls are tight due to volume, even when apple is being sold. That strategy works well for Apple or QQQ or other tight spread stock. There's also a well established history and short position with a stock like apple making limits to upside manageable (vs straight calls). With Tesla, the upside is especially unknown, given the short squeezing potential

On the Syn Longs, I'm currently thinking of doing a Jan 2015 $35 Put/$28 Call. I can get into that and get paid about $2/share, and should TSLA be $40 in 2 years, I'll be making about $14/share total. That's twice the profit compared to buying today at $33, and requires no money up front. I wouldn't start losing money until TSLA drops below $30.50. At $28 I'd be down $5/share, which is about what you'd be down if you bought the stock today and held.

A more risk-adverse Syn Long is the $28 Put/$35 Call, which is free to start and has no loses above $28 but doesn't start making money until TSLA is above $35. BTW, if Tesla skyrockets and you want to stay along for the ride, you simply exercise the Call and buy the stock at $28 2 years from now.

However, I don't want to over-expose myself on a potential drop in Tesla, which is why I was thinking some low-risk BCSs might also be a good strategy. I guess I just need to find a good BCS/BPS analysis tool.

Yep, I like those plays a lot from my perspective and for those that already own straight calls, you can put this on even now by just selling some puts against them

 

[kenliles]

One other thought I'll throw out there. There's arguably a severe downdraft potential for the entire market mid feb hru mar with debt ceiling default that Amy induce a swing down below the put that normally wouldn't occur, potentially with an unexpected put to you. Makes the long term put strategy unusually vulnerable for what might be even a short time, but still there. For those that have intentions of pulling back or shorting the entire market during that time, might consider it.

One potential would be to sell Feb puts for the anticipated report upswing. Then hold LEAP calls through the cliff downdraft, during which you sell puts. Tough timing but if that's what you believe is likely to happen (my current thinking), might be a consideration

 

[smorgasbord]

There's arguably a severe downdraft potential for the entire market mid feb hru mar with debt ceiling default ...

Your strategy makes sense, but I prefer to keep things simple. Rather than trying to time individual Puts and Calls, I just have some dry powder reserved to snap up bargains if/when they appear. Knowing that a good company's stock is down only because of some basically unrelated event is, I think, a good way to invest. As Buffet said: If you do want to time the market, be greedy when others are fearful. It does take fortitude, though. I may sell some volatile high flyers this month to have some more cash available when the sale starts.

 

[kenliles]

Your strategy makes sense, but I prefer to keep things simple. Rather than trying to time individual Puts and Calls, I just have some dry powder reserved to snap up bargains if/when they appear.

That works too. Good advice. Just be a little more careful on the puts strike. It may get caught in the downdraft and get put to you before you're ready. The good news there is that we just experienced some of it and TSLA actually held up pretty well. I'd guess with a good report coming, it would again

 

[smorgasbord]

That works too. Good advice. Just be a little more careful on the puts strike.

I keep double-daring TSLA to really drop by selling Puts on dips, but it almost always flinches first. I figure if it does double-drop, I end up with shares at a good basis. Right now I'm in for Mar $20 Puts at $2.45 and Jun $32 Puts at $5.68 that got me some matching Calls and cash. There's some risk in the Jun $32s, but I've got two quarterly reports in which to make money on the corresponding Calls.

If I wanted to go out on a limb, from the latest down drift, I might guess that people are scouring TMC and figuring that Tesla is at the low end of their 2012 Q4 production promises.

Of course, just a week after June Option expiration, the stock price of Tesla and Axion will have crossed, at least according to stock seer John Petersen http://seekingalpha.com/article/296317-plug-in-vehicles-weighed-in-the-balance-and-found-wanting#comment-1942657

 

[aronth5]

Is Tesla a Buy, A Short Or a Stay away?

From Seeking Alpha a more balanced article than most. Nice to see also see some really positive comments from Model S owners.

From analyst Sam Wong who says he is long on Tesla
"Recent Tesla (TSLA) stock analysis has been like a schizophrenia swinging between titles such as "History And Valuation Makes Cash Guzzling Tesla A Short" and "Buy This Apple of the Auto Industry". There is no shortage of strong opinions on both sides. The stock itself has lately been an enigma. While 49% of the outstanding shares are shorted, the share price has appreciated 20% in the last two months. If you feel torn on this one, you have plenty of company. Will Tesla succeed? There is no simple answer. I have collected 15 common arguments from both sides and listed them below in no particular order. I will give you my brief comments. You will be the judge."

http://seekingalpha.com/article/1098721-is-tesla-a-buy-a-short-or-a-stay-away?source=email_rt_article_readmore

 

[kenliles]

I keep double-daring TSLA to really drop by selling Puts on dips, but it almost always flinches first.

Of course, just a week after June Option expiration, the stock price of Tesla and Axion will have crossed, at least according to stock seer John Petersen http://seekingalpha.com/article/296317-plug-in-vehicles-weighed-in-the-balance-and-found-wanting#comment-1942657

Know what you mean. Every drop gets bought. Those are decent bets, even if u have to take the $32 put in march (us default on debt ceiling). It will recover quickly and to your point 2 good reports likely coming.

JP will have a lot of explaining to do by the end of this year. None of which will actually happen, eliminating his and similar influence on stock price

 

[grisnjam]

Any news causing the sharp falloff (-3% today)?

 

[Bardlebee]

I almost feel like hype drives this stock sometimes. No news means bad news or something to that extent.

 

[Yuri_G]

The market is down in general today. I think Tesla is feeling an enhanced effect of that.

 

[ppl]

Wonder if we are sdown because of lithium ion battery issue in Boeing 787? Conjecture that they may have produced fire on plane. I would think we would know if issue in cars already with number on road

 

[Discoducky]

I'm ready to buy back in at $32 as it meets resistance.

 

[kenliles]

Wonder if we are sdown because of lithium ion battery issue in Boeing 787? Conjecture that they may have produced fire on plane. I would think we would know if issue in cars already with number on road

I thought of that as well. Fortunately it looks to be the wiring on the ground power unit battery, so no real effect

 

[ppl]

I thought of that as well. Fortunately it looks to be the wiring on the ground power unit battery, so no real effect

Reality doesn't always reflect emotions. Just association of lithium battery and problem could have been responsible

 

[kenliles]

Reality doesn't always reflect emotions. Just association of lithium battery and problem could have been responsible

So true

 

[blakegallagher]

Sold some options before the Holidays because I was worried about Congress and the "Fiscal Cliff" Just moved most of my position into June 34 call options. I am a very small investor ... my Total position is about 3500 dollars

 

[Sparky]

I guess I should have just held.
When it hit $30, I sold my small-ish position that I held since the IPO. Now, I'm trying to time a buy. Against what I expect to be good news for Model S sales and reservation rate in Q4, I think the debt ceiling gamesmanship could depress everything enough to be an opportunity. Also, I expect the good news on the Model S to be muted by a delay in the Model X. I just haven't heard much from Tesla with less than a year to go to believe they're on schedule. So, when they announce a 6-9 mo Model X slip in the midst of all the Beltway B.S.; perhaps that's an opportunity.

 

[Citizen-T]

Also, I expect the good news on the Model S to be muted by a delay in the Model X. I just haven't heard much from Tesla with less than a year to go to believe they're on schedule. So, when they announce a 6-9 mo Model X slip in the midst of all the Beltway B.S.; perhaps that's an opportunity.

Eh, they have said they aren't going to be giving us updates on future models the way they did on the Model S anymore. They want to play things closer to the chest moving forward. Makes sense, they needed to keep people interested with Model S for several years the (at times excessive) transparency in the development process achieved that. I don't think that silence on the X is any indication of where they are in the process. They just don't need to keep us occupied anymore. We've got Model S to do that now.

Now, that's not to say I necessarily expect X to be on time. But I think a 6-9 mo. slip is a bit much; if there is one at all. And I'd need to see some actual evidence to support that. The lack of evidence that they are making progress isn't convincing.

 

[ppl]

I guess I should have just held.
When it hit $30, I sold my small-ish position that I held since the IPO. Now, I'm trying to time a buy. Against what I expect to be good news for Model S sales and reservation rate in Q4, I think the debt ceiling gamesmanship could depress everything enough to be an opportunity. Also, I expect the good news on the Model S to be muted by a delay in the Model X. I just haven't heard much from Tesla with less than a year to go to believe they're on schedule. So, when they announce a 6-9 mo Model X slip in the midst of all the Beltway B.S.; perhaps that's an opportunity.

I do not believe there will be deal until last second if there is a deal at all. Lesson learned from previous round is that markets will assume, like previous round, that last second deal will occur so don't rally expect response before. Even previous downgrade of credit rating resulted in drop in treasury rate, nobody but you and I care. I do not expect them to admit to delay in model x since delivery time frame left so open ended. I don't see that concern yet. I would like them to announce rate of production now, I don't understand delay in that why no news just makes stock drift. Curious if he sticks with 25% margin claim when most people use 15% in their calculation for this company