TSLA Market Action: 2018 Investor Roundtable

[Dennisj00]

There are way too many Monday Morning Quarterbacks analyzing every word or action of Elon and implying they could have done better with the ramp. I don’t think we give the team and Elon enough credit to be where we are today.

I’m not usually aligned with conspiracy theories but it’s totally possible that a contractor was paid to muck up the works.

 

[johnnybgood888]

I appreciate your clarification, Enzo!

I didn't necessarily read your post as having any bad intentions, but I have just been seeing quite a few posts lately having negative backlash against people like TT and VA and making an equivalency between them and the bears, just from opposite ends. They definitely deserve some criticism in what seems like blind optimism sometimes, but as I have said before, I think they come from a sincere place, as opposed to those who are trying to mislead and obfuscate.

I understand that it's human nature to want to blame our losses on someone, and I have definitely been guilty of that, but I have come to terms with the fact that ultimately, I'm responsible for pulling the triggers on my stock trades, and if they had worked out, I'm not rushing out the door giving a portion of that profit to TT and VA, why should they take the blame when they don't work out.

I truly enjoy the enthusiasm from TT and VA about Tesla, and like you, they were instrumental in convincing me to invest heavily in the company, not just from the standpoint of making a lot of money, but also proselytizing the EV mission and making our planet a better place for our children. I hope that the recent criticisms have not dampened their enthusiasm for the company, their mission, and also for this board. I hope they continue to post their thoughts here.

And along the same lines, I hope bears like @myusername continues to post constructive thoughts on here as well. Apart from his silly numerology conspiracy theories, he does provide some contrarian views backed up with why he believes what he believes. That can help provide some sober reflections and keeps us from viewing Tesla and Elon with only rose coloured glasses.

Let's be honest, if we were told this little upstart called Bestla ran by Aron Dusk is planning to disrupt multiple trillion dollars industries, but need our complete faith and monies to make that happen in 10-15 years, while losing billion of dollars annually on their financial sheets, we would have the same skepticism that the bears have now. The only reason most of us are all in on TSLA is because they have proven they can do it on a smaller scale and Elon have a track record of insane commitment to the cause and successfully building what others say he can't. It's still a leap of faith on our part, albeit, a calculated leap.

 

[madodel]

No doubt, but the more important question is whether Musk re-branks it Weyland-Yutani, Zorg, Tyrell or Wallace...

Druidia. I just rewatched Spaceballs the Movie again today. It is a nest of potential references and names. Edit: And potential new products.

 

[Zhelko Dimic]

I'm holding some Jan 2019 $500 calls that are down about 50% from when I bought them mid last year. Do you suggest that I take the loss and get out of them, or continue to hold hoping for a miracle comeback? I would roll them forward, but unfortunately, I'm completely out of powder and I do not want to get deeper into Margin after what happened the last 2 weeks.

Jan '19, $500 strike is a high leverage gamble. It's not enough that SP goes up, but it needs to go up fairly rapidly to not lose money. I've lost a lot holding similar position in '16. Tesla taught me that anything can happen and last much more than you expect.
Now, 50% of value left is bad, but 0% is worse. If you're not gonna have fresh powder soon, I feel(and I may be wrong) priority should be to survive, to fight another day.
But ultimately, it really depends on your risk levels - if you're ok losing 100%, it's an option to hold these. If not, I feel you should use one of the swings up to deleverage to something closer in the money, or exchange '19 for '20 in an x:y ratio. With both of these chance of reward goes down, but chance you retain some capital goes up...

 

[johnnybgood888]

Jan '19, $500 strike is a high leverage gamble. It's not enough that SP goes up, but it needs to go up fairly rapidly to not lose money. I've lost a lot holding similar position in '16. Tesla taught me that anything can happen and last much more than you expect.
Now, 50% of value left is bad, but 0% is worse. If you're not gonna have fresh powder soon, I feel(and I may be wrong) priority should be to survive, to fight another day.
But ultimately, it really depends on your risk levels - if you're ok losing 100%, it's an option to hold these. If not, I feel you should use one of the swings up to deleverage to something closer in the money, or exchange '19 for '20 in an x:y ratio. With both of these chance of reward goes down, but chance you retain some capital goes up...

Great advice, Zhelko, I will definitely take it into consideration!

 

[JRP3]

And along the same lines, I hope bears like @myusername continues to post constructive thoughts on here as well. Apart from his silly numerology conspiracy theories, he does provide some contrarian views backed up with why he believes what he believes. That can help provide some sober reflections and keeps us from viewing Tesla and Elon with only rose coloured glasses.

Somehow we managed for years without bears posting the same tired arguments here. Plenty of other places to read such if you feel the need. There is enough real data for us to share and discuss without having to wade through redundant useless posts from extremists on either end of the spectrum.

 

[sdtslafan]

Jan '19, $500 strike is a high leverage gamble. It's not enough that SP goes up, but it needs to go up fairly rapidly to not lose money. I've lost a lot holding similar position in '16. Tesla taught me that anything can happen and last much more than you expect.
Now, 50% of value left is bad, but 0% is worse. If you're not gonna have fresh powder soon, I feel(and I may be wrong) priority should be to survive, to fight another day.
But ultimately, it really depends on your risk levels - if you're ok losing 100%, it's an option to hold these. If not, I feel you should use one of the swings up to deleverage to something closer in the money, or exchange '19 for '20 in an x:y ratio. With both of these chance of reward goes down, but chance you retain some capital goes up...

What do you think about the 1/19 400s for $29?

 

[ggr]

Mod: bunch 'a' posts moved to Technical Analysis. --ggr.

 

[Menifeer]

What do you think about the 1/19 400s for $29?

You might want to SELL them...

 

[Zhelko Dimic]

What do you think about the 1/19 400s for $29?

The only thing that makes me an expert is amount of money I managed to lose, and still survive and recover.
But my experiences have coloured my views to be much more defensive.

First thing I'd ask you is if this is play on volatility or you intend to hold until expiration?
If you intend to hold until expiration, at $429 you're even, and you need $460 to double your money. What percentage of chance would you attribute to this?
If you play on volatility and want to exit mid-stream, this option will be worth the same $29:
- around June if Tesla rises some $35 to $370
- around September i Tesla rises some $65 to $400
And in order to double your money, you need further $30 appreciation from numbers I quoted above, i.e. $400 to $430 June to September!

Now, if Tesla rapidly gains $30-$40 in the next month, you're gonna do well. Anything after that starts to eat into your time value. If Tesla breaks $400 in the next month, you're gonna do really, really well. But, my experience has been that market punishes me when I think only of offense and not the defense. And this option offers not even d of the defense. Sideways movement, slow upward movement or downward movement will all punish you.

So from my 'defensive' stance, this option is still aligned with very aggressive expectation, and would make sense to me only to spice up portfolio, as a small percentage gamble on otherwise boring position.

To be truthful, with volatility that Tesla shows, it's possible to almost always profit from any position you take, if you can market time it, and walk away when you're somewhat positive - but I haven't found wisdom in myself to nail such periods, and have missed many opportunities to save some gain, or significant chunk of portfolio while I had a chance.
I feel most of retail investors without years of experience will fall for the same trap. I got almost obliterated on Tesla after 4 years of trading other stocks btw. I did nail very bad period, Model X ramp and SolarCity acquisition, but still...

 

[sdtslafan]

The only thing that makes me an expert is amount of money I managed to lose, and still survive and recover.
But my experiences have coloured my views to be much more defensive.

First thing I'd ask you is if this is play on volatility or you intend to hold until expiration?
If you intend to hold until expiration, at $429 you're even, and you need $460 to double your money. What percentage of chance would you attribute to this?
If you play on volatility and want to exit mid-stream, this option will be worth the same $29:
- around June if Tesla rises some $35 to $370
- around September i Tesla rises some $65 to $400
And in order to double your money, you need further $30 appreciation from numbers I quoted above, i.e. $400 to $430 June to September!

Now, if Tesla rapidly gains $30-$40 in the next month, you're gonna do well. Anything after that starts to eat into your time value. If Tesla breaks $400 in the next month, you're gonna do really, really well. But, my experience has been that market punishes me when I think only of offense and not the defense. And this option offers not even d of the defense. Sideways movement, slow upward movement or downward movement will all punish you.

So from my 'defensive' stance, this option is still aligned with very aggressive expectation, and would make sense to me only to spice up portfolio, as a small percentage gamble on otherwise boring position.

To be truthful, with volatility that Tesla shows, it's possible to almost always profit from any position you take, if you can market time it, and walk away when you're somewhat positive - but I haven't found wisdom in myself to nail such periods, and have missed many opportunities to save some gain, or significant chunk of portfolio while I had a chance.
I feel most of retail investors without years of experience will fall for the same trap. I got almost obliterated on Tesla after 4 years of trading other stocks btw. I did nail very bad period, Model X ramp and SolarCity acquisition, but still...

Thanks Zhelko, this post was extremely helpful. I really appreciate your careful thought process.

My feeling is that there is a decent chance Tesla is successful with the Model 3 ramp from here on out. There have clearly been a lot of delays up till this point, and so I honestly believe they have a good understanding of the situation and that the "error bars are much smaller". For me, and this is just a hunch, I think they will do it and surprise to the upside. Now i could be wrong and have made mistakes in the past. But if I am right, then this could set up a scenario very similar to April 2013 when Elon pulled a rabbit out of a hat and surprised the market. In the scenario where there are 2500 cars per week being pumped out by March 1, model 3 will quickly gain a lot of attention. The volume of model 3s being made will exceed X and S. I think that will generate more demand and we could hit 1 million orders sometime in the first half of the year. Tesla has been given a gift of an extra 6 months to figure out the model 3 ramp without a massive hit to the share price. I think there is a decent chance they will capitalize on it.

Now there can be minor hiccups but if Tesla is on the right trajectory, I believe we could hit 600-700 by September and maintain that through the end of the year. Of course macro situation has to comply. If share price is 700, then the option is worth 300 at expiration which is a 10 x gain. So I lose 29 dollars at worst and gain 300 dollars in a highly optimistic scenario. Those are risks I may consider.

If you look through my history, I have not made any such statement of positive share price expectations previously. But to me there are a lot of parallels to Q1 2013 and I think there is a decent chance there will be symmetry in the outcomes.

I know it is very hard to hit a homerun with options. But as long as the share price hits 429 by Jan 18, I am at least not losing money. And the potential gains could be tremendous. If the share price hits 700, I would exercise the option and buy the shares on margin to avoid paying short term capital gains. Then I could ride it out because I'm already up 300, perhaps sell at 200 profit and pay some tax if the stock falls back to 600, but otherwise hold a much larger number of shares then I could normally afford as we move into 2020 where we should achieve 500K production. Although I would be paying margin interest, I wouldn't pay tax unless I sell and could capitalize on the upward trajectory.

 

[Zhelko Dimic]

Thanks Zhelko, this post was extremely helpful. I really appreciate your careful thought process.

My feeling is that there is a decent chance Tesla is successful with the Model 3 ramp from here on out. There have clearly been a lot of delays up till this point, and so I honestly believe they have a good understanding of the situation and that the "error bars are much smaller". For me, and this is just a hunch, I think they will do it and surprise to the upside. Now i could be wrong and have made mistakes in the past. But if I am right, then this could set up a scenario very similar to April 2013 when Elon pulled a rabbit out of a hat and surprised the market. In the scenario where there are 2500 cars per week being pumped out by March 1, model 3 will quickly gain a lot of attention. The volume of model 3s being made will exceed X and S. I think that will generate more demand and we could hit 1 million orders sometime in the first half of the year. Tesla has been given a gift of an extra 6 months to figure out the model 3 ramp without a massive hit to the share price. I think there is a decent chance they will capitalize on it.

Now there can be minor hiccups but if Tesla is on the right trajectory, I believe we could hit 600-700 by September and maintain that through the end of the year. Of course macro situation has to comply. If share price is 700, then the option is worth 300 at expiration which is a 10 x gain. So I lose 29 dollars at worst and gain 300 dollars in a highly optimistic scenario. Those are risks I may consider.

If you look through my history, I have not made any such statement of positive share price expectations previously. But to me there are a lot of parallels to Q1 2013 and I think there is a decent chance there will be symmetry in the outcomes.

I know it is very hard to hit a homerun with options. But as long as the share price hits 429 by Jan 18, I am at least not losing money. And the potential gains could be tremendous. If the share price hits 700, I would exercise the option and buy the shares on margin to avoid paying short term capital gains. Then I could ride it out because I'm already up 300, perhaps sell at 200 profit and pay some tax if the stock falls back to 600, but otherwise hold a much larger number of shares then I could normally afford as we move into 2020 where we should achieve 500K production. Although I would be paying margin interest, I wouldn't pay tax unless I sell and could capitalize on the upward trajectory.

I understand your logic, it makes sense and I hope your expectations are correct. I'd do really well in that scenario too.
However, I've spent the whole '15 waiting for repeat of '13 that didn't happen; hopefully '18 turns out closer to '13, but we did get great first part of '17.
I'm trying to actively discourage my wild expectations, and I don't see TSLA SP crossing $500 this year. Again, I'm keeping my expectations low, so it's not like a have a good understanding. I do think TSLA market cap gets into 90B-100B this year or the next, for sure..

 

[22522]

I understand your logic, it makes sense and I hope your expectations are correct. I'd do really well in that scenario too.
However, I've spent the whole '15 waiting for repeat of '13 that didn't happen; hopefully '18 turns out closer to '13, but we did get great first part of '17.
I'm trying to actively discourage my wild expectations, and I don't see TSLA SP crossing $500 this year. Again, I'm keeping my expectations low, so it's not like a have a good understanding. I do think TSLA market cap gets into 90B-100B this year or the next, for sure..

There are a lot of options at $315.

 

[myusername]

There are way too many Monday Morning Quarterbacks analyzing every word or action of Elon and implying they could have done better with the ramp. I don’t think we give the team and Elon enough credit to be where we are today.

I’m not usually aligned with conspiracy theories but it’s totally possible that a contractor was paid to muck up the works.

Maybe if they didn't say 200k, then 100k, then 50k, then 10k, then deliver 1.5k, then say 5k and 10k, then 2.5k and 5k, and now what?...

then maybe people wouldn't have expected so much and might actually look at this as a success?... this situation is directly on Elon.

 

[Intl Professor]

But as long as the share price hits 429 by Jan 18,

I hope you meant Jan 19.

Best.

 

[Menifeer]

I hope you meant Jan 19.

Best.

The expiration date is January 18, 2019

 

[bdy0627]

Thanks Zhelko, this post was extremely helpful. I really appreciate your careful thought process.

My feeling is that there is a decent chance Tesla is successful with the Model 3 ramp from here on out. There have clearly been a lot of delays up till this point, and so I honestly believe they have a good understanding of the situation and that the "error bars are much smaller". For me, and this is just a hunch, I think they will do it and surprise to the upside. Now i could be wrong and have made mistakes in the past. But if I am right, then this could set up a scenario very similar to April 2013 when Elon pulled a rabbit out of a hat and surprised the market. In the scenario where there are 2500 cars per week being pumped out by March 1, model 3 will quickly gain a lot of attention. The volume of model 3s being made will exceed X and S. I think that will generate more demand and we could hit 1 million orders sometime in the first half of the year. Tesla has been given a gift of an extra 6 months to figure out the model 3 ramp without a massive hit to the share price. I think there is a decent chance they will capitalize on it.

Now there can be minor hiccups but if Tesla is on the right trajectory, I believe we could hit 600-700 by September and maintain that through the end of the year. Of course macro situation has to comply. If share price is 700, then the option is worth 300 at expiration which is a 10 x gain. So I lose 29 dollars at worst and gain 300 dollars in a highly optimistic scenario. Those are risks I may consider.

If you look through my history, I have not made any such statement of positive share price expectations previously. But to me there are a lot of parallels to Q1 2013 and I think there is a decent chance there will be symmetry in the outcomes.

I know it is very hard to hit a homerun with options. But as long as the share price hits 429 by Jan 18, I am at least not losing money. And the potential gains could be tremendous. If the share price hits 700, I would exercise the option and buy the shares on margin to avoid paying short term capital gains. Then I could ride it out because I'm already up 300, perhaps sell at 200 profit and pay some tax if the stock falls back to 600, but otherwise hold a much larger number of shares then I could normally afford as we move into 2020 where we should achieve 500K production. Although I would be paying margin interest, I wouldn't pay tax unless I sell and could capitalize on the upward trajectory.

You want to be cautious with calls, especially OTM ones. That's the easiest way to end up losing money, though you do have quite a bit of time for the stock to go up when going with LEAPS. Keep in mind that options make the most when there is a rapid climb. That usually happens after a rapid dip. TSLA has lots of those. Sometimes twice per month. As long as you don't get overly greedy, you can do very well buying calls after a 10%+ dip. Just make sure you sell them before the next dip. That's the tricky part. If you use calls this way then you really don't need to pay the time value for LEAPS. LEAPS are a different strategy. Use a calculator like this:
Long call calculator: Purchase call options

You might want to be more cautious with your stock assumptions and find the option that provides a reasonable gain for the rise. If it is a moderate rise then ITM/ATM calls will do better than OTM. If the stock takes off and does get to $700, you will still do really well, and you are putting the odds more in your favor than going OTM. I have found that even when I think I am being conservative with my stock assumptions, I am often proved too optimistic.

 

[Chickenlittle]

Somehow we managed for years without bears posting the same tired arguments here. Plenty of other places to read such if you feel the need. There is enough real data for us to share and discuss without having to wade through redundant useless posts from extremists on either end of the spectrum.

Have to disagree with you. I do not remember time without bears posting endlessly redundant tired arguments here.

 

[Zhelko Dimic]

There are a lot of options at $315.

I don't understand your point

 

[sdtslafan]

You want to be cautious with calls, especially OTM ones. That's the easiest way to end up losing money, though you do have quite a bit of time for the stock to go up when going with LEAPS. Keep in mind that options make the most when there is a rapid climb. That usually happens after a rapid dip. TSLA has lots of those. Sometimes twice per month. As long as you don't get overly greedy, you can do very well buying calls after a 10%+ dip. Just make sure you sell them before the next dip. That's the tricky part. If you use calls this way then you really don't need to pay the time value for LEAPS. LEAPS are a different strategy. Use a calculator like this:
Long call calculator: Purchase call options

You might want to be more cautious with your stock assumptions and find the option that provides a reasonable gain for the rise. If it is a moderate rise then ITM/ATM calls will do better than OTM. If the stock takes off and does get to $700, you will still do really well, and you are putting the odds more in your favor than going OTM. I have found that even when I think I am being conservative with my stock assumptions, I am often proved too optimistic.

That's very helpful, thanks.

Just to clarify, the 400 Jan 19 options make up only 7% of my Tesla holdings at this time with the rest being stock.

Is any portion of your Tesla investment OTM leaps like the 400 1/19? If so, what percentage?

The way I see it, if these options go to 0, I still have 93% of my investment.

But if they end up in the money, it would give me reason to exercise the options (even on margin) and that would almost double my number of shares. Hopefully I would have a profit cushion that I could let these shares ride and possibly go higher, while giving me time to get out without losing my initial capital investment if things turn south.

Just trying to think it out.

But I see your point, most people see this option as perhaps too risky and would play it safer.