TSLA Market Action: 2018 Investor Roundtable

[UncaNed]

Good to see that more people start to understand the positive financial impact driving a 3 versus their gas car today. The math will only get better from here having the option for MR and later SR.

Obviously the personal situations are very different and no calculation will look like the other still its really important to look at true and full TCO which most people just don't do or do not know how to do. For me it was a no brainer for other people it may not make financial sense now but maybe it does later.

Finally if you want to be honest to yourself you need to factor in what the carbon emission is doing to climate change and the health of people and yourself financially.

So far that costs are something that the society has been asked to pay for you but it comes back to all of us and you through e.g. taxes or health costs one day. That can't really and easily be calculated but its a larger part than you may believe it is.

I did not put that even in my calculation because I did reach break even after 2-3 years already and that was enough to confirm to me only a fool will not switch .....

Reflects my idea of only buying a new car if you're gonna drive it over 200,000 miles to spread out the cost. But surely he'll win over customers just because of his Peter Griffin chin!

(...am I pushing my off-topic luck here???)

 

[UncaNed]

Short sellers are struggling. Their massive bet against Elon Musk isn’t helping.

Look at that cover image!

In the bathroom? Is he squatting in the corner without the benefit of the porcelain convenience most of us consider mandatory in that room?

 

[30seconds]

I’m trying to figure out the latest bear argument.

Seems like we are either back on 1. There is no demand (sales only in CA, price cut in China) or 2. VW/ Porsche is coming

Very weak. Kind of surprised that so many are still at it

 

[UncaNed]

Anybody who has any take on whether we are entering a recession or not atm?

As we've had low interest rates for a decade now, the dept level is very high. And it's high not only for consumers, but also for companies and governments... But, on the other side, companies are raking in high profits, unemployment is low and P/E doesn't seem unreasonably high generally speaking.

Maybe someone who remembers the financial crises of '07-'08 can chime in: Do you see lots of similarities to today's market, or is it a different situation?

Nope. Not in the least, no worries at all, though a very old friend of mine was last seen muttering something about October, 1929, he didn't elaborate on it much, so I'm sure it's nothing at all.

 

[Intl Professor]

To repeat: Your argument is built on two things that I do not accept as premises. One, that delta, which is based on sigma, which is based on market activity (aka, consensus view), should be trusted uncritically - regardless of whether one does not agree with the market consensus on likely stock movement (something that applies to most people here). And two, that there exists a such thing as an "obviously better call", despite the existence of automated trading systems, which if true could just purchase said "obviously better calls" on options and write the "obviously worse calls".

If you have an issue with this, you should explain why:

1) You think we should trust sigma (and thus delta) despite not trusting the market consensus on likely stock movement
2) How "obviously better calls" and "obviously worse calls" would be expected to persist without automated trading systems exploiting them.

Delta is entirely unnecessary when one feels they have a good grasp on specific likely market movement driven by specific market news that will occur at a specific known timepoint, but lower confidence outside that range. In such a case, options that expire shortly after said news have little time value; only (modeled) inherent value matters. Yes, longer-term options will also be affected by this news, but they also have time value affected by a sigma value for which one has low confidence. Why should I invest in variables that I have low confidence in?

In case you're curious, I actually expect volatility to drop after Q4. Not disappear, but be lower than Q4, and a lot lower than Q3 (back in Q2-Q3 I predicted lower volatility in Q4 than Q3, and it certainly looks like we're headed that way). The reasoning is simple: Tesla has been incredibly volatile due to two competing theses, whose adherents have been equally passionate about: the bullish thesis, which requires no repeating, and the bears' "Tesla is incinerating cash and is going to need to have an imminent capital raise (if they even can!) before being flooded by Tesla killers in the market place" thesis. Q3 being profitable was a serious blow to the latter. Two profitable quarters in a row will render it as fringe. People will still dispute the proper valuation and how the market will evolve, and there will continue to be both bulls and bears, but the polarization in the mainstream will not focus around such radically differing views ("Off to the moon!" vs. "Imminent bankruptcy").

If volatility is lower over 2019 than is currently assumed, then that lowers delta for long-term options. Which makes long-term options a worse investment.

But to reiterate: see the paragraph beginning with "Delta is entirely unecessary when...".

I loved this though I know not of which you commentatith. Gentlemen, beware, there may be a giant treading among our weeds.

 

[UncaNed]

I've seen multiple hints that Panasonic is angling for a merger with Tesla. They did a very curious reorganization a while back, putting their entire worldwide battery business under their primary North American corporate entity -- and IIRC removing a bunch of other stuff (such as retail consumer product sales) from their North American corporate entity -- so that their North American corporate entity contains only products which Tesla might be interested in. This feels very much like angling for a merger. Both companies are relatively short on cash, so they may be aiming for a stock-for-stock merger of Panasonic's North American corporate entity with Tesla where Panasonic ends up with a hunk of Tesla stock.

You heard it here first.

I assume this would mean a big SP boost, but stock-for-stock merger sounds like a bigger joined entity with other no inherent benefit to either or both entities?

 

[UncaNed]

The US tax rules are why, perversely, it makes sense to buy and hold in after-tax accounts and engage in speculative frequent trading in retirement accounts. Kind of messed up but there it is.

Is this to do with capital gains tax rate?

 

[EVNow]

That's the beauty of it! Let me introduce you to Gamma. Furthermore- gamma also changes with the price.
And that's exactly how you end up with different outcomes.

I think the Greeks are useful if you are playing with options of much more stable stocks or indices. With Tesla, not so much.

BTW, you would expect atleast with minimal SP change (say $2), the delta would represent the movement of the option price. But it doesn't, in practice !

Anyway, for selecting a strike price, I've not found them to be useful. Instead, I used Black-Scholes spreadsheets to estimate the option price at various SP & dates to figure out what to buy.

 

[JRP3]

For anyone thinking of doing their own DIY project with salvaged Tesla 18650 packs..

...without a BMS, or temperature management, and in a wooden box...

 

[Carl Raymond]

I assume this would mean a big SP boost, but stock-for-stock merger sounds like a bigger joined entity with other no inherent benefit to either or both entities?

Recent tweets by Musk suggest that as things stand, future growth rate will be set by the rate at which Panasonic are prepared to install new lines. Musk would hate that. He like things vertical so Tesla calls the shots. A merger will allow Tesla to control the growth rate. I'm for it, even though I don't expect it to move the stock price in short term.

 

[JRP3]

I'm for it, even though I don't expect it to move the stock price in short term.

Should move my PCRFY

 

[KarenRei]

...without a BMS, or temperature management, and in a wooden box...

And without awareness that the way you put out a li-ion battery pack fire is water, in large quantities. Instead of hosing off the nearby cars, that hose should have been nonstop on that pack for several hours....

 

[JRP3]

To be fair they were hosing down the other cars because flaming cells and metal were raining down on them. I was thinking a wet blanket or a piece of sheet metal thrown on it might have contained the projectiles. Maybe.

 

[HG Wells]

If there is a merger of part of Panasonic and Tesla how would it affect Leaps (calls) ?

Should I get rid of my 350 leaps and move back to stock ?

 

[scaesare]

...without a BMS, or temperature management, and in a wooden box...

And potentially using a 48v charger designed for lead-acid chemistry that would peak well above the safe voltage of a 12S li-ion pack...

 

[AZRI11]

LMAO WHAT

Such an outta-left-field comment.
You're a method actor who's playing the part of Shorty Air Force in the upcoming feature film, huh?

Shorty airforce in training

 

[RiverCard]

↑
The US tax rules are why, perversely, it makes sense to buy and hold in after-tax accounts and engage in speculative frequent trading in retirement accounts. Kind of messed up but there it is.

Is this to do with capital gains tax rate?

"Speculative, frequent trading in retirement accounts" works as long as they are cumulatively net profitable. The miscellaneous deduction for a cumulative net loss in Roth IRAs is history. Loss on ROTH IRA in 2018 | Ed Slott and Company, LLC

 

[RFernatt]

I wonder what the effect will be long term when we have masses of people in the US who are unemployable.?
Coal miners essentially are there now but a a pretty small segment. Sure there is the outlier success story of the person who is retrained...but really most are not.
If we get to semi-autonomous driving there goes truck driving ( A huge part of which are non college degree white males) I'm thinking platoon type driving with the "last mile" being perhaps human.

I have no doubt my job (Pilot) is a goner at some point in the not to distant future.

Other fields are doomed as well such as Radiologist current computer vision and analysis is good enough to be at least as good as a Dr. Most low level support staff is going away as machine language improves. There are many fields that have many people working in them that are in danger or being replaced with non human ....for lack of a better word ..workers.

It seems we are on the cusp of a pretty scary revolution. Think about the alien dreadnought ...yeah it is cool and will help our stock portfolio's but man that is a lot less people working.

I think we will have to implement some sort of UBI in the future. But the transition from a almost full employment like today to a almost full non-employment is going to be rocky.

And with those thoughts...have a happy weekend all!

Along the lines of your post, I always thought this was a timely video:

 

[RFernatt]

Short sellers are struggling. Their massive bet against Elon Musk isn’t helping.

Look at that cover image!

LOL. Love the LOTR reference from the comments to that article.

 

[elasalle]

That's break even at expiration. He will be either assigned long before that, or sold the option before theta starts to bite.

Being Assigned before would be bad, at a loss (but usually assignments will not happen) - most likely scenario will be to have to dig one self out of a hole by being more creative by rolling over and over. Just 5-10 days back SP was at 350, so I definitely would not sell calls at 340. ..~ cheers