Zhelko Dimic
Careful bull
Are you subscribed to sqzme service? GEX seems to be awfully useful info for playing with options towards the end of the week.
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I'm surprised some TMC bulls are already selling a portion of their holdings...
I added more detail to my DCF model on the plane to San Diego (@DaveT) and tweaked some assumptions. I estimate that the company is worth a lot more than its current price.
I'm not selling a single share.
I added more detail to my DCF model on the plane to San Diego (@DaveT) and tweaked some assumptions. I estimate that the company is worth a lot more than its current price.
I'm not selling a single share.
Irrelevant. TT007 is still buying.
1. Options will likely ruin your life and piece of mind for the entire time you hold them. Even when things are going perfectly, they are so f'ing volatile, that they will freak you out. At least that has been my experience.
2. They will always seem like somehow you are getting screwed. When the stock goes up, the option will never go up quite as much as you think it should. When the stock goes down it will go down in value more than you think it should. Also, if you use Fidelity anyways, the way that they report your daily loss and gains is super infuriating, and exaggerates your daily losses, and minimizes your daily gains. It has to do with changing back and forth between the bid price, and the last trade price over night. Even though I understand what is going on, it infuriates me all day, every day.
3. They make it way too easy to take on way too much leverage and loose every penny of your money.
4. Despite points 1-3 above in rare situations where a stock makes a huge move, they are absolutely magic. I once bought $500 worth of puts on Washington Mutual, that I sold for over $20,000. I always think of that if I am ever tempted to sell options.
My personal strategy with options is to treat them like a lottery ticket. I assume that I am going to loose every penny that I spend on options, but that the small chance that things will go really, really well, still makes it a bet worth taking. If the options I buy go down in value I have always just held them to maturity and taken the 100% loss. (The WAMU options I mentioned above fell 90% in value, before going crazy.)
When it comes to Tesla, I personally have a large, for me, position of Jan19 300 calls, that I bought over time when the stock was between $200-250 a share. They are up about 220% at the moment, and are grinding down my soul, even though they are doing great. When I put on the position I had about 3x in Tesla stock, as the money I put in options. That was a huge options position for me, by far the biggest I have ever taken, but I did it because I believed there was a real chance that Tesla could go on a phenomenal run over the next 18 months. Now, the options have gone up so much faster than the stock, that they are worth almost the same as my stock position. Personally I am not buying any more options at the current price, but if I was buying them with your money, I would would probably buy Jan19 400 to 450. The way I would think about it is, I would say there is around a 25% chance that Tesla could be above $600/share by Jan 19 if all the stars align, and a much smaller chance it could be much higher some time between now and then. That might make it worth it, depending on your risk tolerance, and position size. The price and percentage targets are completely shooting from the hip gut feeling, with no complicated math or models to back them up. For what it's worth, I see very little value in complicated math and models, since they have way too many inputs that are just wild guesses, and can give you a huge false sense of security. They can cause you to hold on way too long if things go bad, and even worse, the can cause you to sell way too early if things go really well. Stocks regularly go to values that are wildly higher than even the most optimistic models. I feel it is better to remain ignorant, hopeful, and scared.
For me, I don't really like the buying deep in the money calls strategy. I feel like it would lure me into taking on too much leverage. I have thought about it a few times recently since it has been mentioned here, but keep coming back to the following scenario. I sell my shares and buy a bunch of Jan 19 200 calls. I get no sleep for the next 18 months. The Model 3 ramp goes bad, politics go bad, whatever, Jan 19 comes around and Tesla is at 215/share, but it's future still looks extremely bright. I have lost 90%+ of my money and feel like a total idiot. My wife KNOWS I am an idiot and reminds me about it for the rest of my life. And all for what? Less than double the returns in the best case scenario? Also, It makes it harder to just hold the shares long term and pay no tax if things go well.
I hope this helps.
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I don't want to be a dick, but TT has already from what looks like, been given a warning for promoting off topic in the market action thread. It would make it easier for him if people refrained from making jokes about him that aren't related to market action. #nottryingtoactlikeamod #ididlaughthough
sundaymorning
Active Member
Who is making jokes at TT's expense? I admire his conviction, and wish I had half his resources to invest in TSLA.
Also, with 14 posts , and a join date of May 17... I certainly hope you are #nottryingtoactlikeamod
Also, with 14 posts , and a join date of May 17... I certainly hope you are #nottryingtoactlikeamod
Awesome commentary mate. I've been thinking about them but I understand them so little it really seems far too risky and I'd be better of just sticking with plain stocks.
Can you tell me just as an idea, what the jan19 400 calls are currently trading at? Do you only pay once or do you have to pay a rent cost?
I'm an international trader, so I can't use fidelity or anything like that.
So a big part of the safety rating is fire-resistance! Wonder if one lives in a fire prone area, if it would be better to solar tile the walls of the house too, instead of siding...? Two benefits, more surface area for PV and now some fire proofing!
You can usually find the pricing in your brokerages "options tree". You can also find them on Nasdaq option tree tab on the left. Just look for calls with expiration date of Jan 19. It will list each strike price available for that date with bid ask and last sale price. Make sure you look at "all options", most brokerages and Nasdaq site will default to closest to at the money.
I concur with the previous commentator about playing with options. Treat it like an expensive lottery ticket buy in and expect to lose it all. If you don't like to lose it all, don't play the options. Many have gotten burned more than they got lucky. I'm one of them where I was lucky initially but I didn't set some strict rules to cash in on the temporary prizes. I was an idiot to hold it near the end when they're usually worth not as much as the initial value thinking it would recover.
You can find out the current value of calls or puts through nasdaq.com, search for TSLA ticker, and look for option chain on the left side menu after searching for TSLA.
Tesla cars are sold in red, white and 4 kinds of black.
That is a great explanation! Schwab does the same thing about valuation. During the day they are valued at the bid price, and at the close they switch to the last price. Which means every day at the open my balance loses a ton, and at the end of the day it magically pops up a bunch. I am just used to it.
Since everyone else is offering their posture, I only invest in TSLA. I don't have time to understand any other ticker 10% as much as I understand this one. But, I am rather "diversified" in how I do it. I tend to have about 60-80% leaps across various strikes, some ~6 month calls (my real lotto tickets). I have 10-20% in plain stock, and just around 10% in cash for buying dips (the big, annual ones). I am all ITM leaps, down to about 250. Right now, about 40% is in J19 250's.
I try to modulate my leverage, less at what are or could be tops, and increase on lows. During Feb of '16 I sold all of my stock and leaps and increased my leverage to short term OTM calls which risked everything but I made a fortune.
I have lightened up slightly, up to a whopping 15% cash which is my emotional equivalent of buying puts
Snapdragon is right about it keeping you up at night. Even when it goes well, I am stressed out constantly. I ironically feel better when it goes down, because I can concentrate on something else.
If this lovely talk of 400-500 happens I will be buying the island next to TT.
One way to feel better is to not tell ANYONE I have such an aggressive position. That way if I lose my butt I won't have to even tell anyone. Being single is key for this strategy
(PS some of you will meet my girlfriend this weekend, so don't tell her)
I understand selling now perfectly. I sold some at around 300, so I'm thinking I won't sell any more quite yet, but I'm certainly thinking about it. Over half my net worth is 110% invested in Tesla, and it's starting to look like a long way down.
Many TMC bulls have a near insane amount of exposure to Tesla, and it's only healthy to get cautious as the SP climbs higher. If I sell everything tomorrow, I will for the most part have reached the goals I set out to accomplish when I started investing in Tesla. Of course, more money is always better, but selling now and accomplishing ones goals looks really tempting, compared to holding on, and risk the SP dropping and the goals slipping out of reach.
Personally, I'm forcing myself to hold on longer. Some of the larger mistakes I've made in the past is to sell to soon. But I'm thinking I'll sell maybe 20-30% around 350, to reduce my exposure to TSLA below 100%. Then I can hold on to the rest to above 400.
Yep. Off hand, tough to say if the premium plan (for GEX data) is worth it, but I'm far more aggressive* than I should be (please, listen to the above warnings about options!), so at times it's helped me avoid theta rot on short term calls when high GEX is limiting price movement, as well as know when to back up the truck/crank up leverage when the stars align (low, or especially negative GEX, coupled with active short+ term uptrend).
Only issue is the data is updated after close, so by the time I can get an idea of what has higher probability of happening next, price is already moving.
If you do any swing trading though, the normal ($90/mo) plan can be quite useful for DPI data as a confirmation indicator.
* Definitely worth it if you're going to play with options aggressively enough to make more than the $1k/quarter or so *after taxes* based on the data, but if you do, you probably already know you want it.
If anyone reading this is unsure, the answer is no, and furthermore, please, please read the warnings above on risk with options... I'll admit I've literally lost count of the number of times I've gained and lost my yearly salary in the last 6 months. I still frankly have no idea what I'm doing, but each time it happens, I've at least learned yet another thing to do or not do. It's probably safe to say most of you would consider me even more insane than TT007, but I at least promise the first indication that I've figured out how to be a consistently competent trader will be a Model S.
For those of you interested in playing with high risk calls, etc (anything <2018 IMO), I'd advise starting with a fixed amount of cash that you consider lost, gone, never coming back, and never, ever replenishing it. That will teach you about capital preservation, especially when you realize how much work it is to recover from a 50%+ loss (hint, it takes a 100%+ gain!) Additionally, I strongly advise avoiding weeklies if you can't day trade. While I've made 70% gains in 5 minutes on a Friday, I've also done the opposite more than enough times to know how fast a weekly call can go from "paid for sqzme!" to "oops, lost a week's work in trading gains..."
Last bit of advice - if you ever wake up one day and $3k of short term calls are suddenly up $20k, do yourself a favor and immediately sell them, and transfer that $20k out to your savings account. I can attest nothing good ever comes from leaving that money in your account until you know what you're doing...
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Hi Zhelko,
So if I were to understand this right, a Jan 19 call at 100 strike for 241 is going to be the same as buying the market price - $100 per share. Except now that the $241 premium is going to go down each day so it is a race between TSLA increasing in value and me losing premium from time?
Do you mind doing a quick illustration of when you would convert this to shares? Also, when/how would you roll this particular leap into next year?
Where the financial trouble starts is when Jan 19 is close and the share price is less than 341? I don't see myself converting Tesla equity shares to all leaps but use it for some leverage as part of the overall TSLA basket.
Nope, I'm a big boy. I'll post and read my own disclaimer.
The past performance of any investment is not necessarily a guide to future performance. The value of investments or income from them may go down as well as up. As stocks and shares are valued from second to second, their bid and offer value fluctuates sometimes widely. The value of shares may rise as well as fall due to, and not just including, the volatility of world markets, interest rates, economic conditions/data and/or changes in the rate of exchange in the currency in which the investments are denominated. You may not necessarily get back any of the amount you invested.
Thank you for the positions, I will see how much they cost and see if there is a 'best value' from the choices you made.
Excellent and detailed commentary. Thank you.
1.) I'm wading very carefully in the options waters. So far, only a few contracts each week that are NTM after a dip has occurred. Fortunately, SP has recovered after every dip. I end up closing them too early, each and ever single time. However the fear of absorbing a total loss from a bad swing or theta decay to nothing makes me pull the trigger too early to lock in 'some profit'. This is pretty maddening which is why I am thinking I will live longer if I go with LEAPS?
2.) I am using Ameritrade which seems to have a better way? of letting you know your wins/losses? It tells you percentage up or down of your actual return and your price versus bid/ask. The real infuriation is from why do I only have 1-2 contracts that are up 300% instead of 1000-2000 contracts! Being conservative and sleeping well is better than being rich and being worried. I admire those who do dare and win however.
3.) We don't want to go nuts and do fully leveraged positions, simply because there is a time premium and it can go to 0. I see it more as lotto tickets (higher probability with being net positive with good timing/execution) but something that can be all or none. Maybe with great practice/skill/conviction you can go as far as 25% of your total TSLA position as options (just thinking for me personally) but it may take some time to get there and probably miss out on the great run up if it happens too fast!
4.) I like selling covered calls but having all my calls so far hit ITM, its teaching me not to sell calls against TSLA. Only money I have ever lost is either selling too early or trying to buy back my own shares.
I think you did great with Jan 19 300 Calls. You've made money so maybe you can take some off the table or set up a trailing stop or something so you do sleep better. You've "won" already. Its just a matter of how much.
I feel there is probably a maximum of 4 buying windows before TSLA becomes Amazon level share prices. Before July M3 reveal is one of those windows so I feel the pressure is to make a move soon or watch from the sidelines (am I wrong?)
I also agree that its hard to guess what share prices will end up. I'm willing to pay more for NTM vs OTM calls for the higher probability of hitting versus missing. It's worked well -so far-.
I think for a LEAP contract, I would probably max out at 1-2. That's only so much capital I can risk for leverage. Really feel safer with 75% of TSLA holdings based on equity.
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