TSLA Trading Strategies

[Papafox]

So tempted to buy weeklies for next week. I feel it is being held down right now and will pop next week. Still picked up some March calls today feeling like I have a bit of a better safety margin. If it does pop $20 or so next week I'll sell the calls I bought today.

Uselesslogin, I was tempted to do the same thing with a weekly for the same reason, but instead went for a couple of March calls today instead, just before the stock started upward in the final 30 minutes. I am now depending upon guidance during 4Q ER or any other positive catalyst, rather than depending upon a fair deal from those Mississippi card sharks whom I suspect keep a few aces up their sleeves.

 

[CyberDutchie]

I've seen my portfolio value drop more than 50% since the September ATH. At that time I had about half of that in stock and the other half in calls--both near the money (240, 260, 280 Jan'15, 220 Mar'15, and 285 Jun'15 285) and leaps (300 Jan'16).

Yesterday was painful as all my Jan'15 calls vaporized. My problem is that I always keep too much hope for recovery, so I never sold. For brief moments, e.g. when TSLA hit 255, and recently 220, it looked bottom was reached. That's when I added more leaps (300 Jan'17 and 330 Jan'17). Looking back, it would have been the time to sell and at least recover some of the money I spent on these expensive contracts, or to roll them over to further-out calls with lower strikes.

So my question here in the trading strategies thread is: when do you generally cut your losses? How far do you let the time value drop, and how many days before expiration should you get out if things look bleak as they have for the last several months?

Consider that I am trading in a taxable account, and my strategy has been to excersize each of the calls, versus selling them for profit. When you excersize you hold the shares and don't have to pay taxes. It had worked great for me in the past, allowed me to accumulate more shares than I would have otherwise been able to, had I used my cash solely to buy the shares outright.

 

[sundaymorning]

I've seen my portfolio value drop more than 50% since the September ATH. At that time I had about half of that in stock and the other half in calls--both near the money (240, 260, 280 Jan'15, 220 Mar'15, and 285 Jun'15 285) and leaps (300 Jan'16).

Yesterday was painful as all my Jan'15 calls vaporized. My problem is that I always keep too much hope for recovery, so I never sold. For brief moments, e.g. when TSLA hit 255, and recently 220, it looked bottom was reached. That's when I added more leaps (300 Jan'17 and 330 Jan'17). Looking back, it would have been the time to sell and at least recover some of the money I spent on these expensive contracts, or to roll them over to further-out calls with lower strikes.

So my question here in the trading strategies thread is: when do you generally cut your losses? How far do you let the time value drop, and how many days before expiration should you get out if things look bleak as they have for the last several months?

Consider that I am trading in a taxable account, and my strategy has been to excersize each of the calls, versus selling them for profit. When you excersize you hold the shares and don't have to pay taxes. It had worked great for me in the past, allowed me to accumulate more shares than I would have otherwise been able to, had I used my cash solely to buy the shares outright.

A strategy I use is instead of buying OTM I buy ITM calls. It's very difficult to cut losses, especially when history suggests that Tesla tends to recover; however, I would force myself to sell calls that do not appear to have high prospects of recovery, use that money to extend any current holdings that would give me some concern. Good luck.

 

[Causalien]

I've seen my portfolio value drop more than 50% since the September ATH. At that time I had about half of that in stock and the other half in calls--both near the money (240, 260, 280 Jan'15, 220 Mar'15, and 285 Jun'15 285) and leaps (300 Jan'16).

Yesterday was painful as all my Jan'15 calls vaporized. My problem is that I always keep too much hope for recovery, so I never sold. For brief moments, e.g. when TSLA hit 255, and recently 220, it looked bottom was reached. That's when I added more leaps (300 Jan'17 and 330 Jan'17). Looking back, it would have been the time to sell and at least recover some of the money I spent on these expensive contracts, or to roll them over to further-out calls with lower strikes.

So my question here in the trading strategies thread is: when do you generally cut your losses? How far do you let the time value drop, and how many days before expiration should you get out if things look bleak as they have for the last several months?

Consider that I am trading in a taxable account, and my strategy has been to excersize each of the calls, versus selling them for profit. When you excersize you hold the shares and don't have to pay taxes. It had worked great for me in the past, allowed me to accumulate more shares than I would have otherwise been able to, had I used my cash solely to buy the shares outright.

The simplest way to protect gains from calls is to sell calls of higher strike.

Buying calls in order to exercise and gain shares is a bad idea as you lose the gain from time premium of the calls. The better way is to sell puts of a high strike and have that exercised against you. I am not sure how US tax is calculated when a call is exercised, but I prefer the dynamic of a put that was exercised when it comes to tax. I believe your cost basis is seen as strike price - (gains from selling puts) and the event is not considered as a sell.

It depends on the accountant as well. I just record the events separately and pay my taxes right away as I do not want to deal with the government at all.

 

[Papafox]

A strategy I use is instead of buying OTM I buy ITM calls. It's very difficult to cut losses, especially when history suggests that Tesla tends to recover; however, I would force myself to sell calls that do not appear to have high prospects of recovery, use that money to extend any current holdings that would give me some concern. Good luck.

We use similar strategies. When I buy calls I typically buy for the longest time possible and well in the money. I've taken a big hit too these last few months but I suspect my Jan 2016 110s and Jan 2017 160s will recover well before they expire. I bought some of the Jan 2016s with practically no time premium and so there's virtually no time decay. My recent purchase of a couple March 200 strikes is an educated gamble. It may pay off, it may not, but it's such a small part of my portfolio that I can stand to take the loss.

 

[ev-enthusiast]

We use similar strategies. When I buy calls I typically buy for the longest time possible and well in the money. I've taken a big hit too these last few months but I suspect my Jan 2016 110s and Jan 2017 160s will recover well before they expire. I bought some of the Jan 2016s with practically no time premium and so there's virtually no time decay. My recent purchase of a couple March 200 strikes is an educated gamble. It may pay off, it may not, but it's such a small part of my portfolio that I can stand to take the loss.

I always keep some money for buying on irrational short term SP down moves.

As far as I can see, the recent down slide started roughly after "Elon, show me the D"-event where TM revealed the high performance AWD version P85D for Model S.
While I can understand thoughts about correlation of oil prices and some industries and maybe even EV sales as well, my opinion is that this correlation is about getting exaggerated now. At the same time Tesla resolved some minor issues (production ramp up of AWD, new seat / airbag issues, SW-version, charging in China).
Most Tesla customers do not buy their Tesla cars (high ASP) to save money (because riding on electricity saves them some cents compared to guzzling gas at the pump).
Most cars are sold for emotions / way of life, not because a new car saves the new owner some money, and Tesla does deliver exactly here.
Tesla owners know that Tesla-grin/-smile you get every time you hit the accelerator and unwillingly start to smile about that unbeliveable smooth and intense acceleration, just give it a try yourself, it's amazing!
This tremendous driving pleasure of a Tesla Model S is what makes people driving cars of all kinds of companies (Merc, BMW, Porsche, Toyota, ...) change their mind and buy an EV, namely a Tesla. These fact are the source for the new car brand Tesla that is growing stronger and stronger every day potential customers see and experience Tesla products aroud the globe.
This is what continuously drives worldwide demand for Tesla vehicles in such a way that people on this planet put their money down for a car (maybe without test drive like Model X) and wait years for delivery, not expensive oli prices.
And this entire story hasn't changed during the past months, by contrast Tesla has shown the global automotive industry and worldwide customers their latest advances of a high performance electric propulsion powertrain, namely 3.2 sec, 700hp, 500km AWD range P85D Model S.
Adding that this powertrain will gain even more performance during the years to come (average 8% annual improvement rate on Li-Ion tech for next 10 years).

Best is, this is no cheap talk about some prototype or future car, but serious state of the art high performance EV technology already on sale at your damn local Tesla store!
Go, figure it out ask your sales rep about some facts!

Long story short, I bought small amounts of shares during last week's trading for the first time in some weeks.
I intensify buying during next days/weeks on flat SP or any dip.
I consider to add shares and long term calls deep ITM during next days/weeks.
Next Thursday is EZB meeting about QE in Europe, I'll watch out for any news.

By the way my opinion is that in the mean time everybody expects a small miss of 500 to 1000 cars in terms of deliveries next ER.
I do not expect this to be a major issue as at the current level this slight miss is already factored in SP and the factory is currently up and running and cranking out cars like never known before. Based on weekly production rate I expect positive news about production numbers at next ER that is already in Feb. This'll translate in record deliveries during next Q1 and Q2 ER.

Please do your own research and happy investing.

 

[FANGO]

This drop seems so magnified and unnecessary that I'm considering violating wash sale to capitalize on it. I may need to pay some more taxes but considering I've "made" 30 points since I sold some OTM calls I was holding losses on at end of year, that might just make up for the tax bill anyway. Though I'm actually sort of hoping it stays around here til end of month (sorry everyone)...but wouldn't complain too much if it went way up.

 

[uselesslogin]

So tempted to buy weeklies for next week. I feel it is being held down right now and will pop next week. Still picked up some March calls today feeling like I have a bit of a better safety margin. If it does pop $20 or so next week I'll sell the calls I bought today.

May not have popped $20 but I decided I will take the small gain on these March calls. I have to be careful and be sure I have cash to buy a bit more if the price goes down. I have more than enough options as it is. I just get so tempted with the lower prices.

 

[ev-enthusiast]

May not have popped $20 but I decided I will take the small gain on these March calls. I have to be careful and be sure I have cash to buy a bit more if the price goes down. I have more than enough options as it is. I just get so tempted with the lower prices.

Well, gain is gain, well done uselesslogin
With a volatile stock, it is always good to have some cash.
Yesterday and today (on OPEC info) I added some shares and some long term calls to my long position.
Every day we are not able to make it down to $180 I feel like upwards momentum slowly building under the hood.
Still waiting for EZB meeting in Europe that is scheduled for tomorrow.

 

[Noble Ninja]

Thanks. I agree my stomach is not as big as many of your guys in this down turn, even I have but I still prefer not to swallow such BIG loss. So short term trading is a reasonable strategy to weather through storms. I'm LONG TSLA for long term, this is not contradicting of doing bearish trade in short term.

Last May when we dipped to a low of $178 and bounced back up, I was able to get another 100 shares at $200 (I was a bit late on timing). I am definitely very long the stock (at least until Model 3 arrives), but it's almost been nine months since then, and here we are at $200 again. So my buying and holding has produced zero profit growth after 9 months. I know this stock is very volatile and it's tempting to trade the stock (get in and out often), but it's not easy figuring out the timing as someone explained earlier. However, back then my intuition told me I should sell near but slightly before the $300 psychological barrier, which it did hit $288 or so in September, or to at least sell before "red October" (typically a bad month for stocks). I should've listened to my instincts.

... the more important thing is to perceive what market and main street investors thinking.

Nowadays, I've realized I need to sometimes separate the company from the stock, especially one that is highly shorted with FUD and weak longs. Instead, I've changed my strategy from a "buy and hold for years" to "buy and hold for months". It will be a few years until Model 3 and Gigafactories are complete, and during that time the stock will continue to be volatile with huge short interest and FUD, so I think it would be better to sell at a decent enough profit, then buy back using the principle AND profits (buying back even more shares each time). Even if I miss the timing and buy back at a higher price, in the long run I know the yearly-trend is upwards anyway. FYI, I don't use options trading.

 

[stealthology]

If you do use options, I'd keep it to as far back as you can go LEAP options. Near term, nobody is consistently accurate in predicting the price of a stock. I only have Jan 2017 LEAPS at the moment. I started investing with only stock, in January 2013. I love LEAPS. Make SURE you have enough cash though.

 

[Causalien]

If you do use options, I'd keep it to as far back as you can go LEAP options. Near term, nobody is consistently accurate in predicting the price of a stock. I only have Jan 2017 LEAPS at the moment. I started investing with only stock, in January 2013. I love LEAPS. Make SURE you have enough cash though.

People need to stop recommending leaps. I am fairly certain that the current mix of option players will ensure all LEAPs option will be a loss come expiration date.

 

[RationalOptimist]

People need to stop recommending leaps. I am fairly certain that the current mix of option players will ensure all LEAPs option will be a loss come expiration date.

? That would not be possible. Longest leaps you can buy right now are Jan 2017. So if you buy Jan2017 $200-calls at their currently enticing price of $33, and the stock in two years time has, say, doubled to $400, there's no way any institution can drive it back down to $200 to meet a call strike date. Maybe they could drop it $5 to $395. You still make 6x your money in that scenario.

 

[jhm]

Last May when we dipped to a low of $178 and bounced back up, I was able to get another 100 shares at $200 (I was a bit late on timing). I am definitely very long the stock (at least until Model 3 arrives), but it's almost been nine months since then, and here we are at $200 again. So my buying and holding has produced zero profit growth after 9 months. I know this stock is very volatile and it's tempting to trade the stock (get in and out often), but it's not easy figuring out the timing as someone explained earlier. However, back then my intuition told me I should sell near but slightly before the $300 psychological barrier, which it did hit $288 or so in September, or to at least sell before "red October" (typically a bad month for stocks). I should've listened to my instincts.



Nowadays, I've realized I need to sometimes separate the company from the stock, especially one that is highly shorted with FUD and weak longs. Instead, I've changed my strategy from a "buy and hold for years" to "buy and hold for months". It will be a few years until Model 3 and Gigafactories are complete, and during that time the stock will continue to be volatile with huge short interest and FUD, so I think it would be better to sell at a decent enough profit, then buy back using the principle AND profits (buying back even more shares each time). Even if I miss the timing and buy back at a higher price, in the long run I know the yearly-trend is upwards anyway. FYI, I don't use options trading.

Ok, you bought at $200 nine months ago and now tha price is still $200. Forget the stock price for a moment. Do you think the company has become more valuable over the last 9 months? If so, then you are holding a better value today for $200 than you did 9 months ago. This is a real gain in value, is it not?

 

[anticitizen13.7]

Last May when we dipped to a low of $178 and bounced back up, I was able to get another 100 shares at $200 (I was a bit late on timing). I am definitely very long the stock (at least until Model 3 arrives), but it's almost been nine months since then, and here we are at $200 again. So my buying and holding has produced zero profit growth after 9 months. I know this stock is very volatile and it's tempting to trade the stock (get in and out often), but it's not easy figuring out the timing as someone explained earlier. However, back then my intuition told me I should sell near but slightly before the $300 psychological barrier, which it did hit $288 or so in September, or to at least sell before "red October" (typically a bad month for stocks). I should've listened to my instincts.



Nowadays, I've realized I need to sometimes separate the company from the stock, especially one that is highly shorted with FUD and weak longs. Instead, I've changed my strategy from a "buy and hold for years" to "buy and hold for months". It will be a few years until Model 3 and Gigafactories are complete, and during that time the stock will continue to be volatile with huge short interest and FUD, so I think it would be better to sell at a decent enough profit, then buy back using the principle AND profits (buying back even more shares each time). Even if I miss the timing and buy back at a higher price, in the long run I know the yearly-trend is upwards anyway. FYI, I don't use options trading.

The stock may not have moved much in the past 9 months, but I think that's expected due to lack of Model X, which was supposed to be the big launch of 2014.

I remember when TSLA was stuck on the $30 plateau for what seemed like forever, only to rocket upwards once it was clear Model S was the real deal.

I expect more upwards price action if Tesla delivers an awesome Model X, and both ASP and gross margins go upwards as a result (SUV margins tend to be higher than sedan/hatch margins).

 

[Causalien]

? That would not be possible. Longest leaps you can buy right now are Jan 2017. So if you buy Jan2017 $200-calls at their currently enticing price of $33, and the stock in two years time has, say, doubled to $400, there's no way any institution can drive it back down to $200 to meet a call strike date. Maybe they could drop it $5 to $395. You still make 6x your money in that scenario.

Just review what happened to LEAPs expiring this year. 2015 Jan is a bloodbath.

 

[maoing]

It's indeed bloodbath. I bought some 215 Jan 15 leap back to May downturn, once it gained 280% when reaching ATH. But then gain dropped to negative before Q3 ER. Fortunately I sold it with only 50% gain left around 250 post Q3 ER.

Just review what happened to LEAPs expiring this year. 2015 Jan is a bloodbath.

 

[AlMc]

Just review what happened to LEAPs expiring this year. 2015 Jan is a bloodbath.

I agree that LEAPS are very much leveraged and can be a blood bath. However, my strategy has never been to hold LEAPS to expiry. I usually sell if they are up 50%. That could be tomorrow (unlikely), 6 months or closer to expiry. Double edge sword.
Many of the Teslanaires claim to have used LEAPS successfully. I realize that was when the stock was moving from $40-$180 in a relatively short time. But if you buy LEAPS now and the stock goes up 30%, your LEAPS (especially OTM) will go up a greater % (usually) with less money out of pocket.

 

[Robert.Boston]

Remember that a LEAP isn't a LEAP forever. It becomes a quarterly, then a monthly, then a weekly, with all the headaches and responsibilities owning those products entail. There's no obligation to hold a call option until expiry; to the contrary, that's pretty rare. I intend to roll my Jan'16 calls sometime in Q2 out to Jan'17 to keep their LEAP-iness intact.

 

[Causalien]

Remember that a LEAP isn't a LEAP forever. It becomes a quarterly, then a monthly, then a weekly, with all the headaches and responsibilities owning those products entail. There's no obligation to hold a call option until expiry; to the contrary, that's pretty rare. I intend to roll my Jan'16 calls sometime in Q2 out to Jan'17 to keep their LEAP-iness intact.

Yes, but that require knowing how to manipulate options. A lot of the people (from what I observed) are buying LEAPs as stock replacement and has had no options training. It is just not right to see perfectly ggood long term stock holders lose money to options.