Since I do not have PUT privileges but have CALL privileges what move would be possible in this bear market? I am long on TSLA and want to accumulate as many shares as possible.
With options, it's more about buy/sell than type of option. My guess is you can sell Covered Calls, which I just described.
But, if they'll actually let you buy Calls, then that's one way to bet that the price will go up. For instance, (this is just an example, not a recommendation!), you could have bought Jan $33 Calls for $3.50/share today. That means you're betting TSLA will be above $36.50 by Jan 2013 ($33 strike + $3.50 premium = breakeven point). If TSLA is above $36.50 any time between now and Jan 19, 2013, then you could exercise the option and buy the stock at $33. You could then hold the stock for more future gains, or turn around and sell it at the current market price for a profit. Or, instead of exercising, you could sell the Call to someone else for more than you bought it for (as the stock price goes up, the price of its Calls goes up).
Of course, the most straightforward thing is to buy the stock. The stock is volatile, so dips are plentiful.
The nice thing about buying Calls is that you can afford to buy more Calls than you can shares of stock, and the percentage increase of a Call is larger than the percentage increase in the underlying stock. That gives you leverage. The bad things about Calls is that they're time limited - when they expire they are worthless. Stock ownership doesn't expire and rarely becomes worthless. So if Tesla stays in its current price range for 9 months and than doubles, you lose the money you put into the Calls, but if you bought and held the shares they'd be worth double.
If you're thinking about buying Calls, look for long term calls. I think with Tesla today the furthest date you buy Calls on is Jan 2014. That gives you 18 months to be right. Of course, you pay more for that.
Is this helping?
... probably did me a favor...
