TSLA Market Action: 2018 Investor Roundtable

[SPadival]

I don't always trust others for investing wisdom, but when I do, I trust the biggest douchebag on Earth.

Good news. Antoon has lost the bow tie.

Caption contest: my entry

Two bums sitting on a log by the river, discussing the demise of Tesla

 

[Alphacrux]

I've been waiting since Feb '15. SP didn't do a whole lot since... My first buys $240, we were $250 two weeks back...
But yeah, eventually, and eventually may be soon
In the meantime, I've decided I want time to be on my side, so instead of buying calls, I sell far out of money puts (SP+$100=$440 etc)... Very easy to roll out if one is wrong (easier than calls, because you keep selling time, instead of buying time)

Sorry, isn’t that put actually in the money if SP = 340 and you sell a 440 strike put?

When Is a Put Option "in the Money?"
A put option is considered in the money when the current market price of the underlying security is below the strike price of the put option. The put option is in the money because the put option holder has the right to sell the underlying security above its current market price. When there is a right to sell the underlying security above its current market price, the right to sell has value equal to at least the amount of the sale price less the current market price.



Read more: When is a put option considered to be 'in the money?' | Investopedia When is a put option considered to be 'in the money?'
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If so, wouldn’t it be better to sell an at-the-money or out of the money put because you would then be selling all time value and no intrinsic value?

And you can easily sell time by selling a call as well, as opposed to buying a call. In essence, you are receiving a premium by selling either a put or a call by assuming an obligation to buy stock at the strike price (sell a put) or to sell stock at the strike price (sell a call).

 

[Buckminster]

View attachment 349042

Regarding this afternoon's TSLA trading, Ii'm going to have to call "Bullsugar!" Here's why:

Take a look at TSLA's descent from the high of 347.65 at 2:32 pm into close and then into after-hours trading. I suspect we are seeing mischief here by the ever-thinning ranks of shorts, trying to suggest that the InsideEVs "sales" numbers for Tesla's vehicles in October are problematic. Many on this forum have pointed out how Tesla's numbers are delivery numbers, not sales numbers and because of shipping to the East Coast and elsewhere you naturally have much higher numbers at the end of the quarter than in the beginning. Further, as @BenPrice correctly pointed out here, you can't really compare these numbers to September (1st month in previous quarter) either, because the issue of pushing 200,000 deliveries in the U.S.number into the 3rd quarter influenced a much above-average number of vehicles delivered in the U.S. in September. The number that really matters for first month of a quarter is production, and with Model 3 stable in the 5K/wk area (and likely to increase from here), 4Q is looking really good so far.

Here's what the shorts have done, however. Notice the stairsteps down from the high of the day into close? Doesn't that seem to be just too uniform a descent, particularly on a day with the NASDAQ rising during that time period? Now here's the real reason why I am calling "bullsugar!". Notice that the rather uniform descent continues well into after-hours trading until the SP reaches about 341? You're welcome to exam the after-hours trading in the Daily TSLA Charts thread (I'm still working on today's), but if you look at after-hours trading for TSLA you typically see it running pretty much even with the closing price of the day. The exception is when bad news happens during after-hours trading, at which time you see an immediate big jump up or down, depending upon whether the news is good or bad. You don't typically see these shallow climbs or descents because with exceptionally low volume the changes in SP are much more abrupt in after-hours trading. Further, if the SP changes $1 in after-hours, we see this as a significant trend. Today the SP changed $3 in after-hours trading (between 344 and 341 before a slight recovery).

I suggest we watch to see if one of the usual suspects tries to launch a FUD attack tomorrow morning about the InsideEV numbers. If they do, then I would give serious consideration that the attack is coordinated with today's bogus marching down of the TSLA stock price late in the day and in after-hours trading. Watch for it.

Hey Papa - stick to your own thread! Your level of quality analysis is making us look bad...

 

[Zhelko Dimic]

Sorry, isn’t that put actually in the money if SP = 340 and you sell a 440 strike put?

When Is a Put Option "in the Money?"
A put option is considered in the money when the current market price of the underlying security is below the strike price of the put option. The put option is in the money because the put option holder has the right to sell the underlying security above its current market price. When there is a right to sell the underlying security above its current market price, the right to sell has value equal to at least the amount of the sale price less the current market price.



Read more: When is a put option considered to be 'in the money?' | Investopedia When is a put option considered to be 'in the money?'
Follow us: Investopedia on Facebook

If so, wouldn’t it be better to sell an at-the-money or out of the money put because you would then be selling all time value and no intrinsic value?

And you can easily sell time by selling a call as well, as opposed to buying a call. In essence, you are receiving a premium by selling either a put or a call by assuming an obligation to buy stock at the strike price (sell a put) or to sell stock at the strike price (sell a call).

You're right, I misspoke I sell puts deep in the money (strike $440), not 'far out of money'. Idea is to capture some SP rise in addition to time-value. Of course, potential is limited, and if we blew up to $1000, I would get only initial selling price, i.e. some $120 (assuming $20 is time value)

 

[Buckminster]

Should we be worried or excited about Elon talking Saudis with Kara Swisher? MBS no longer in the news much - everyone looking the other way.

Anyway - what's the worst that can happen?........

 

[Alphacrux]

You're right, I misspoke I sell puts deep in the money (strike $440), not 'far out of money'. Idea is to capture some SP rise in addition to time-value. Of course, potential is limited, and if we blew up to $1000, I would get only initial selling price, i.e. some $120 (assuming $20 is time value)

That is fine, but be aware (as you probably are) that with any American-style deep in the money put, the stock can be put to you ( you are forced to buy it at the strike price) any time before expiration. Usually though, only when most of the time value is lost, either because you are nearing expiration, or possibly through a sudden major drop in the stock price.

 

[Zhelko Dimic]

Yes, you are right. I'm answering details in case anyone else is interested in this strategy...
I sell leaps and similar, at least couple of months left on options, and with large time-values, no one is gonna gift me $10-$30 of time-value by assigning me
Now, whatever happens with SP, I wouldn't hold something with no time-value, as it ties in my margin, so in such situation, I would roll it out to something with time-value, perhaps lower strike and further expiration... Example JAN20 $450 gets replaced with MAR20 $430 or JUN20 $420, something like that.
This is in addition to holding shares that provide margin collateral at their usual 50% If I'm not mistaken, owning 1000 shares lets me run around 5 puts short, but that would be aggressive with little margin of margin space - not quite sure of the ratio, as I keep some cash, just in case

 

[Ulmo]

Should we be worried or excited about Elon talking Saudis with Kara Swisher? MBS no longer in the news much - everyone looking the other way.

Anyway - what's the worst that can happen?........

Reddit links to Recode Decode, hosted by Kara Swisher but that show isn't up yet.

Reddit thread: Elon Musk & Kara Swisher: "Podcast secured." (31 October 2018) : elonmusk

 

[SpaceCash]

Touching almost $345 USD in Frankfurt. I'll take it as a good sign

 

[avoigt]

VW and Ford to cooperate on EVs and Robotaxis.

It has already been reported in summer that a cooperation is in the works but the new information points to them having found an agreement.

I find that somehow interesting because both are lacking behind in EVs as well as autonomous driving by a large distance and I ask myself what they plan to learn from each other here. Maybe more a benefit for Ford than for VW even if at all?

There are informations about costs reduction and capacity usage as well which sounds like cost efficiency measures in production and maybe also purchasing.

Kooperation in Autobranche: VW und Ford bündeln ihre Kräfte

 

[Carl Raymond]

Not sure what to make of this:

2 Big Reasons For Tesla's Strong Quarter - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha

On the surface it seems reasonable, but the guy is pretending he doesn't know that SG&A has a fixed and variable component. He reasons that tesla pulled a bag out of the hat by reducing SG&A as a percentage of revenue. In reality that's just math. Of course the fixed component reduces as a percentage - it's fixed! Indeed, it's the very reason an auto company has to go big or go home. It's also the logic behind the Secret Master Plan part one, penetrate the market from the top down, something they continue to adhere to, with long range before short.

It's a sly attempt to argue the stock price war goes on. Baloney. Tesla have won.

 

[KarenRei]

Not sure what to make of this:

2 Big Reasons For Tesla's Strong Quarter - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha

On the surface it seems reasonable, but the guy is pretending he doesn't know that SG&A has a fixed and variable component, and that tesla pulled a bag out of the hat by reducing SG&A as a percentage of revenue. In reality that's just math. Of course the fixed component reduces as a percentage - it's fixed! Indeed, it's the very reason an auto company has to go big or go home. It's also the logic behind the Secret Master Plan part one, penetrate the market from the top down, something they continue to adhere to, with long range before short.

It's a sly attempt to argue the stock price war goes on. Balony. Tesla have won.

Tesla hasn't "won" until the vast majority of them concede. They don't necessarily have to concede publicly, but they have to concede with their wallets - aka, giving up on shorting the stock for the time being. They can make up whatever excuse they want to comfort themselves, so long as they stop pumping money into shorting the stock.

Contrarily, so long as they think that this quarter was in some way or another a rigged "one time thing", it's still "game on". Which is why I never expected Q3 to be their defeat (and mentioned this quite a few times previously, whenever the exuberance on here got too high). Q4 will be more powerful, as it's pretty dang hard to deny two profitable quarters in a row.

Q3 simply provides a boost. But whenever the shorts see the stock get too high, they'll be back to shorting it. Their ranks have been thinned somewhat (and that's to our advantage) - but they're not vanquished.

 

[SpaceCash]

Gonna be a good day.

I reiterate my main points and overall thesis because I just have a feeling about the next week:

- TSLA is the most shorted stock in the US by $ and far more importantly, by %
- Q3 was absolutely blowout crazy good and DOES permanently change the trajectory/trading range of the stock. Those who don't acknowledge this seem naive to me, but time will prove what time will prove.
- VW/Porsche-type squeeze is ENTIRELY possible, and I still believe, very probable.
- you CANNOT cover ~30 Million shares gracefully when the sugar hits the fan
- Cheers

 

[Carl Raymond]

Tesla hasn't "won" until the vast majority of them concede. They don't necessarily have to concede publicly, but they have to concede with their wallets - aka, giving up on shorting the stock for the time being. They can make up whatever excuse they want to comfort themselves, so long as they stop pumping money into shorting the stock.

Contrarily, so long as they think that this quarter was in some way or another a rigged "one time thing", it's still "game on". Which is why I never expected Q3 to be their defeat (and mentioned this quite a few times previously, whenever the exuberance on here got too high). Q4 will be more powerful, as it's pretty dang hard to deny two profitable quarters in a row.

Q3 simply provides a boost. But whenever the shorts see the stock get too high, they'll be back to shorting it. Their ranks have been thinned somewhat (and that's to our advantage) - but they're not vanquished.

True. Should have said "victory is assured" rather than "have won".

 

[SpaceCash]

True. Should have said "victory is assured" rather than "have won".

Victory secured

348.80 in PM right now.

Night night, bullfam

 

[Singer3000]

I'm sure someone smarter than me already did some analysis on here a while back. But not all the short position is betting on a price fall. Some of it will be hedging by market makers, arbitrage plays on convertibles and risk covering by margined equity-loan financiers (Elon's personal liquidity line for instance).

Of those that are betting on a price fall, not all are "Tesla Is a Zero" die-hards. Some will be short term valuation plays, others will be focused on Tesla's high beta. You'd expect the smarter ideological bears to be gradually exiting in the coming months/quarters. There will be a portion that are ready to go down with the ship. Will be interesting to see what short volume is by say 05 July 2019, once Q2 delivery report is out.

 

[Carl Raymond]

Gonna be a good day.

I reiterate my main points and overall thesis because I just have a feeling about the next week:

- TSLA is the most shorted stock in the US by $ and far more importantly, by %
- Q3 was absolutely blowout crazy good and DOES permanently change the trajectory/trading range of the stock. Those who don't acknowledge this seem naive to me, but time will prove what time will prove.
- VW/Porsche-type squeeze is ENTIRELY possible, and I still believe, very probable.
- you CANNOT cover ~30 Million shares gracefully when the sugar hits the fan
- Cheers

It's Friday. On weekends people gather and talk about "stuff", like their amazing new Model 3, or their Tesla stock that is up 33% in one week and is gonna rocket in 100 days. If I was a short, weekends would make me nervous.

 

[Bet TSLA]

I've decided I want time to be on my side, so instead of buying calls, I sell far out of money puts (SP+$100=$440 etc)... Very easy to roll out if one is wrong (easier than calls, because you keep selling time, instead of buying time)

There's also a side benefit in that you don't get screwed if somebody decides to take the stock private at $420.

 

[avoigt]

Feels good to be long.... !

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[Thekiwi]

The suggestion that people might move out of Apple into Tesla is actually a really valid point. Apple as a growth stock story pretty much fell over yesterday. It’s still a great cashflow story at a cheap valuation multiple (coupled with an ongoing giant stock buyback) - but it’s stuck in single figure revenue growth territory for the time being.