TSLA Market Action: 2018 Investor Roundtable

[Reciprocity]

Quick strategy idea for these stocks like Tesla that has a lot volatility. What if you bought DITM puts when the stock was high, and sold them on the dips to buy shares. The goal is not to hold them, but to flip them more shares. You would need some DITM calls to go with it. You would sell those on run ups and buy the puts. Rinse and Repeat as a way to magnify your position without taking to much risk. Am I over simplifying this? In general the DITM calls are cheaper when the stock takes a hit and the puts are cheaper when the stock is up 50 points like it has been over a short period of time recently.

 

[Fifield]

Time and again TSLA is beaten down as it approaches $359.87. It'll be interesting to see the percent of trading done by shorts today, and whether it's elevated from its recent dip (I don't think it will be, I think this was just a fairly low volume trading day). If short selling remains low as a percentage of total trading, it's a potential sign this convertible hedge has been lifted, allowing TSLA to soon break through this resistance.

Covertible hedging
Tesla convertible senior notes

 

[BornToFly]

Before the latest, run, I had bought DITM calls with Jan 19 exp. I realized that was dumb, because I couldn't hold them long enough to pay long term capital gains tax, rather than my income bracket, on the profits. So I sold them when we climbed to around 342 for a small profit, thinking we would head back down and I could roll them into 2020s. So far, my timing was terrible, and we have continued to climb (which is great for the rest of my TSLA portfolio). But I think a dip back into 330s or lower is possible when Feb. Insider EV number are released, so I'm sitting on a lot of dry powder right now. If we don't dip, I plan to be patient and wait until Q1 numbers are released in the beginning of April. I might miss out on some gains, but I would rather have cash on hand right now, then risk having to sell at a loss to meet a margin call if my fears are realized.

P.S. - According to Papafox, short activity has been down the last several trading days. I think "smart" shorts are waiting for bad ramp news to jump back in hard and really magnify any dip. I think we could easily drop 10% in a couple days when that happens.

 

[D-egg-O]

I think shorts are waiting for the February delivery numbers from InsideEVs and the I-Pace production unveiling to launch a coordinated bear attack. Not advice.

 

[pz1975]

I sold almost all of my J19 LEAPS today but kept all the J20 LEAPS I bought during the recent dip (averaged around $308 buy-in price) that were meant to replace the J19's. I was on margin for the last few weeks as a result but anticipated this move back up. It may go higher still but I am happy with the timing of my delayed roll out of the LEAPS.

I also have some dry powder now waiting for the next dip.

 

[Esme Es Mejor]

In the last 11 trading days, the stock has rallied from a low of $294.76 to a high of $359.00 today, before settling into $357.42 at the close. That’s a gain of over 21% in 11 days.

21% may not sound like much, but if the stock gained 21% every 11 trading days for the next year, it would end up over $23k. Per share.

I’m going out on a limb & saying the SP is not going to $23k in the next year.

Anyway, the market action has been crazy lately.

 

[CaliBear1]

In the last 11 trading days, the stock has rallied from a low of $294.76 to a high of $359.00 today, before settling into $357.42 at the close. That’s a gain of over 21% in 11 days.

21% may not sound like much, but if the stock gained 21% every 11 trading days for the next year, it would end up over $23k. Per share.

I’m going out on a limb & saying the SP is not going to $23k in the next year.

Anyway, the market action has been crazy lately.

I

In the last 11 trading days, the stock has rallied from a low of $294.76 to a high of $359.00 today, before settling into $357.42 at the close. That’s a gain of over 21% in 11 days.

21% may not sound like much, but if the stock gained 21% every 11 trading days for the next year, it would end up over $23k. Per share.

I’m going out on a limb & saying the SP is not going to $23k in the next year.

Anyway, the market action has been crazy lately.

Ahh, don't go all 007 on us! ;-)

 

[Esme Es Mejor]

Ahh, don't go all 007 on us! ;-)

That’s another crazy thing! TT007 went bust in the middle of all this.

 

[Tslynk67]

That’s another crazy thing! TT007 went bust in the middle of all this.

Seems criminal to me, rather than crazy... But as I said before, I don't really understand the whole "margin thing".

 

[RobStark]

Seems criminal to me, rather than crazy... But as I said before, I don't really understand the whole "margin thing".

How is it a crime?

He is a grown man that of his own free will placed a large risky wager with borrowed money and lost.

I think he is also driving around in a rather well equipped Model S and Model X purchased with past winnings.

 

[Tslynk67]

How is it a crime?

He is a grown man that of his own free will placed a large risky wager with borrowed money and lost.

I think he is also driving around in a rather well equipped Model S and Model X purchased with past winnings.

Like I said, I don't understand the details of margin borrowing, but seems the timing of the broker to pull the plug didn't really help anyone. Is that normal behaviour?

 

[avoigt]

Like I said, I don't understand the details of margin borrowing, but seems the timing of the broker to pull the plug didn't really help anyone. Is that normal behaviour?

Yes it is.

A Bank has the obligation to protect the investment they did and if a risk appears that they maybe don't get their money back its justifiable that they start selling stocks and options on behalf of the client. Part of the rules you sign up.

From what I read from TT007 they tried to call him but he was not reachable. I guess they wanted to ask him if he wants to cover the difference required to avoid the margin call. So, long story short it sounds to me he took a really high bet/risk and was not available when it turned against him. Nothing to blame the Banker for.... but still feel sorry for him and hope he will learn from it and recover soon.

P.S. Am not a Banker nor can claim to like them much...

 

[dw4ngg]

They also own foreign stocks which is easier to act on. For the commercial buildings, it depends on how it will impact the seller when the deal fell through.

Just to say, that there are opportunities everywhere in the market everyday. TSLA for me has been a good steady 3% per month deal. No need for leverage. High vol stuff = no leverage. Low vol stuff = leverage until you get a 30%/year vol equivalent potential. 30% per year is really good. Les than 1% of fund managers can do this. So by aiming to beat this and do 100% or 300% per year, you are trying to say that you are smarter than the top 1% who are more connected than you are.

A lot of time, when staring at some of the yolo bets I was about to make, I take a step back and ask myself if I am smarter than them and most of the time I say no. I know my IQ, I know my SAT score and I know my years in the market. None of these measure tells me I am in the top 1% when it comes to these stuff.

Like I said, I don't understand the details of margin borrowing, but seems the timing of the broker to pull the plug didn't really help anyone. Is that normal behaviour?

Yes margin = min capital, aka cash and stock requirement, bc you’re borrowing money to purchase stock. If stock goes down, you need more cash. If cash is not received, positions are liquidated. Think through that slowly at a high level.

Lower level, various securities have diff % min capital requirements.

It’s a slippery slope, and I prefer LEAPs and calls for leverage bc at least you know the timing there and aren’t tempted to break your own margin rules. You can always leverage yourself too high when a stock is climbing if you’re eternally optimistic like 007

 

[jhm]

In the last 11 trading days, the stock has rallied from a low of $294.76 to a high of $359.00 today, before settling into $357.42 at the close. That’s a gain of over 21% in 11 days.

21% may not sound like much, but if the stock gained 21% every 11 trading days for the next year, it would end up over $23k. Per share.

I’m going out on a limb & saying the SP is not going to $23k in the next year.

Anyway, the market action has been crazy lately.

Time to camp out at $370?

 

[Nate the Great]

Margin allows you to buy dips without exiting your other positions, this is especially important if those positions are taxed.

With Fidelity they will grant you 50 percent of your account size (taxed account). This is just enough rope.

pz1975 used it correctly.

 

[Tslynk67]

Margin allows you to buy dips without exiting your other positions, this is especially important if those positions are taxed.

With Fidelity they will grant you 50 percent of your account size (taxed account). This is just enough rope.

pz1975 used it correctly.

I see now that my bank offers a 100% margin account. Now should I consider it...?

 

[pz1975]

Shorts aren’t going to let 359/360 go without a big fight it seems.

 

[Nate the Great]

I see now that my bank offers a 100% margin account. Now should I consider it...?

I would say that this is a personal question.

If there was a market pullback how would you handle it?

I have it, but haven't used it as of yet. On this latest dip, I used normal powder to purchase leverage.

 

[AlMc]

I see now that my bank offers a 100% margin account. Now should I consider it...?

I won't tell you what you should do. I will only comment that I would never use margin.

 

[elasalle]

I see now that my bank offers a 100% margin account. Now should I consider it...?

per your past posts, I think you don't even trade Options due to perceived risk, if so stay away from margins.

TMC contributors are all at different levels in terms of cash, expertise. First thing should be to do a self-assessment and figure out where you stand, and then trade accordingly.