Yes!
Wall St. only looks out 3 months at a time; 6 months at the most. So you can still beat them if you buy shares or LEAPS.
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Alternative Energy Investor Discussions
- Thread starter ShortSlaver
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Yes!
Wall St. only looks out 3 months at a time; 6 months at the most. So you can still beat them if you buy shares or LEAPS.
With this rise poking my June JASO I bought back in January above break even, I'm looking at rolling all my JASO stuff into the 2016 LEAPS and I'd be interested in your thoughts (along with anyone else so inclined) on picking a strike. The 12s or 15s look good for reasons I can't figure out how to describe. I guess they feel unlikely to be worthless unless JASO tanks entirely, so some safety, but good leverage. Those LEAPS are really thinly traded so the bid/ask spread is gigantic. I'll start by bids low and work my way up to try and get a bite at the lower end of the spread.
That's my thinking. Now, please tell me where it's wrong
With this rise poking my June JASO I bought back in January above break even, I'm looking at rolling all my JASO stuff into the 2016 LEAPS and I'd be interested in your thoughts (along with anyone else so inclined) on picking a strike. The 12s or 15s look good for reasons I can't figure out how to describe. I guess they feel unlikely to be worthless unless JASO tanks entirely, so some safety, but good leverage. Those LEAPS are really thinly traded so the bid/ask spread is gigantic. I'll start by bids low and work my way up to try and get a bite at the lower end of the spread.
That's my thinking. Now, please tell me where it's wrong
I can only speak for myself but I did sell some JASO when it ran up the day before ER, and bought some Jan 15 and Jan 16 $12 LEAPS when it dropped the following day. They are slightly 'in the red' at this moment. Reason they are 'in the red' is the bid/ask spread. I bought them for slightly above the 'bid' at the time. As soon as I bought them they went back to being valued at the 'next in line' high bid which was lower. They do seem to be very thinly traded but if you believe that JASO is severely undervalued then either the $12 or $15 strikes you mentioned should do well. ($15 in Jan 16, not Jan 15...my advice...for what it is worth!)
With this rise poking my June JASO I bought back in January above break even, I'm looking at rolling all my JASO stuff into the 2016 LEAPS and I'd be interested in your thoughts (along with anyone else so inclined) on picking a strike. The 12s or 15s look good for reasons I can't figure out how to describe. I guess they feel unlikely to be worthless unless JASO tanks entirely, so some safety, but good leverage. Those LEAPS are really thinly traded so the bid/ask spread is gigantic. I'll start by bids low and work my way up to try and get a bite at the lower end of the spread.
That's my thinking. Now, please tell me where it's wrong
Agree with that. Consider also that JASO is a bit of an odd duckling. It's thinly traded currently because it's not followed/rated by a lot of analysts/houses. But given it's tremendous underlying strength and potential (relative to it's valuation and support), there's a good chance it will reveal and move a lot between now and J16. With that in mind I took the approach of a wide spread but stuck with J16 strikes of $12 (for tracking near term gains better) and $20 for loading up volume of position (for relatively low cost) for the 'inevitable' catch-fire whenever that happens (skate to where the puck will be- in this case higher strike longer time frame).
also, it's an excellent idea to start low (below midpoint) on bid to buy and move up and reverse on sell as you both describe. The bid/ask spread is large, but you can almost always get an order fill closer to midpoint (both directions). AIMc as you noted, that's why those show red, but in actuality you could sell those for more than the bid of course so they look redder than they actually are. It's because there aren't sufficient trades to reflect the actual traded spread, so the market maker sets it (and purposely wide). When you put your bid in, let it sit for while before moving it up to see if the market maker will pickup the trade even against no current standing sell orders- they very often do (ditto on the sell).
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Johan
Ex got M3 in the divorce, waiting for EU Model Y!
With optionsxpress.com there is a type of order called "Walk limit" where you define a starting and ending point (by default the bid - ask range) and then the order (if it's a buy for example) starts at the lowest bid point and moves up in small increments until filled. Works well, and I use it always instead of market orders when I have decided to buy or sell NOW.
that's true- because JASO has been there before, TSLA would be there for the first time, but you're right about that. As the JASO expert, I would default to sleepy's advice on the best strike range. Can't remember exactly but I think he posted somewhere he had $12s $15(or$16?) and some $20s. I think weighted on the lower side if I remember right- I did about an even split in $s between the $12s and $20s- so a little different approach
thanks for that Johan- excellent way to do it. I usually do it manually- but that sounds like a great feature
JRP3
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Muskol
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Alternative Energy Investor Discussions (formerly SCTY thread)
I have setup my JASO LEAPS per kenliles stock replacement strategy, which I have taken a liking to.
My spreads are as follows:
Jan15 - 10 and 15 strikes (40%)
Jan16 - 15 and 20 strikes (60%)
Under that I hold common stock roughly equal value to all the LEAPS (currently)
With this rise poking my June JASO I bought back in January above break even, I'm looking at rolling all my JASO stuff into the 2016 LEAPS and I'd be interested in your thoughts (along with anyone else so inclined) on picking a strike. The 12s or 15s look good for reasons I can't figure out how to describe. I guess they feel unlikely to be worthless unless JASO tanks entirely, so some safety, but good leverage. Those LEAPS are really thinly traded so the bid/ask spread is gigantic. I'll start by bids low and work my way up to try and get a bite at the lower end of the spread.
That's my thinking. Now, please tell me where it's wrong
I have setup my JASO LEAPS per kenliles stock replacement strategy, which I have taken a liking to.
My spreads are as follows:
Jan15 - 10 and 15 strikes (40%)
Jan16 - 15 and 20 strikes (60%)
Under that I hold common stock roughly equal value to all the LEAPS (currently)
Yep, I'm just starting that too as it seems to fit me well. However, as I noted the J16 20s have a super steep price. Compare the premium for those in percentage of strike terms to TSLA J16 420s. JASO is around $1.75 or 11-12% of the 20 strike, where TSLA is about $17ish or 4% of the strike. Huge difference for the same relative gain.
The JASO J16 15s are ~$2.75 or 18% of the strike, and the corresponding TSLA would be J16 315 at ~35ish or 11%.
Maybe that sort of comparison is flawed in some way?
Comparisons across different underlying is a tough one- because of the relative risk. JASO has visited the $20 strike (and more) in it's history coupled with the $20 strike being the highest offered J16 garners more demand. That said, you're right, it is about double the premium (both of the $15 strike and the corresponding TSLA - although not triple as the $20 strike would be had near midpoint or $1.65 yielding 8% of strike v TSLA 4%; the JASO $15 yields near identical premium to equivalent TSLA- about 12% I believe). The question you'd have to answer is whether the extra premium is worth it. It's my belief that JASO may well hit $20 before even end of this year. That's going to make those $15s worth about $8 >> 290% yield and the $20 strikes worth about $6 >> 360% yield despite the double premium - normally you might take the $15s on a reduced risk, but if your rolling the LEAPS (rather than expiring them), that risk is highly mitigated. Additionally, the lower leg $12 strike protects the flank for sub par performance still yielding good return and the $20s carry an initially smaller Delta that accelerates rapidly if JASO really cranks fast. For example if we hit $20 JASO in 3 months, the $15 strikes will be worth about $8.80>>320% return but the $20s will be $6.60>>400% return. In other words, the lower leg ($12 strike v $15 say) allows a higher risk reward on the top side if it really cranks (and that's altogether possible for JASO imo). Even though the premium is double in percentage to the other strike, that premium amount in percentage is washed out by the potential gain. On balance of a single strike I would agree with your analysis and take the $15; On a spread though, I still think the $20s might be worth the extra premium when balanced by a lower leg- I currently carry double the contracts in $20s to $12s (similar $ amounts for each). But I'm not carrying any J15s (rolled those out already earlier when the price was up, probably too early, but I'm balancing against another Solar I'm carrying as they tend to track).
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Speaking of spreads...if the 20s have comparatively higher premium, then buying a bull call spread from 12-20 might be nice? Looks like it could be got for about 1.50, that's not too bad.
That comparison is not flawed, and shows the difference in IV.
For this reason I recommend investing in solar using shares and not necessarily options. If you buy the J16 $20's then you need the stock to go up 100$ just to break even. That is a tall order for any stock to do in less than 2 years.
If the stock triples then your LEAPS might give you a 5-bagger vs. a 3-bagger if you simply bought the stock. Not much reward for the risk you are taking, because if the stock goes up "only" 80% then your LEAPS go worthless, while you would get to keep stock gains.
I think that buying stock in solar is the best way to go. If you are doing options, then you really have to stay on top of the solar sector to know when to get in, and especially when to get out.
The time to buy options was a couple months ago when JASO was at $8.30, or even last week at $9.60. Right now may not be the best time to buy; then again it could prove to have been a great time to buy.
I can recommend stock, but with options you guys are on your own; because there is a ton of risk in solar options and the IV is ridiculously huge. E.g. I bought some GOOG options yesterday and they are up 60% today, even though the stock is only up 2.5%. If that was a solar stock instead, then I would still be in the red on those options due to wide bid/ask spreads.
And of course, by the time I was able to sit down and do trades, the market is crashing throwing whatever I'd be thinking out the window with getting rid of my shorter term options as they've dropped a ton in, oh, the last 30 minutes while I was driving to work.
I really have to start doing all my trades at the end of the market day rather than nearer the start, but market close is 1pm PST and 10-1 is just always jam packed in my daily schedule.
yeah- I rarely trade in the mornings anymore. I know just what you mean;
Also, sleepy's words have a lot of merit. The IVs are pretty high. Bear in mind ALL of my current LEAPS were bought JASO sub $10.50, 3/4s sub $10, 1/2 sub $9; So he's right with current conditions. Now in the LEAPS-for-stock program though (if that's your intention), there is never any possibility of carrying those to expiration (thereby retiring worthless). It's always a roll-out 3 months(minimum) from expiration even if taking loss at that time or earlier. And your (hopefully) measuring the LEAP position by the equivalent (Delta)stock tracking rather than just equating $s in. So it's really a risk that JASO will be higher and a reasonable chance to reach ATM($20 in this case) by Sept2015 or before. It's meant to leverage more gains than stock equivalent- In sleepy's example, if the stock goes up 80% by then (close to $20), you would have rolled out of even those $20 strikes- but he's right that the leverage is currently diminished by the premium on those. I would not hesitate to heed his words one bit on that. You might consider a stock position for now, then convert to the LEAPS-for-stock on a pullback (and with Solar that's a given!). I do that often with very volatile (but solidly growing) situation. In fact, do it now with the LEAPS; I always carry a pinning position of stock and use it when appropriate. Recently for Tesla converting half of it back into LEAP when it dropped to $210- once we get back to the $250 area, I'll convert it back to stock and precipitate the cash.
Also, for everyone that believes in JASO (same goes for any other solar stock) and wants to invest in it:
If you all just buy options, calls or LEAPS, and not stock then the market makers are going to have a field day with you all. They can very easily manipulate the stock price to make sure that your calls go worhtless. When you buy options, you really do not make an impact on the underlying stock price. Instead you are hoping that someone else is going to buy the stock for your options to move up in value.
If all everyone did was buy options then the stock will not go up. It puts downward pressure on the stock, because the JASO believers (and trust me, there really aren't that many out there on Wall St.) are pouring their money into options instead of buying shares.
On the other hand, when you buy shares and hold them, then you are taking the supply of shares out of the market which puts upward pressure on the stock price. If you all bought shares instead of options, then that could make the stock price go up a lot quicker (to reach what I and all analysts view as fair value for the shares). But when you buy options it does not have that effect.
I know that you might be thinking that a couple hundred or thousand shares may not make a difference, but it really does. If you get a 100 people to buy 1000 shares, then it really puts a big dent into the share supply count and the stock will move up.
I myslef own a 5-digit number of shares in JASO myself, and I don't have a lot of buying power at all relative to Wall St. or even some of the people on this forum. But if there was only a couple thousand people on this planet (out of 7b+) that thought like me and bought the same amount of shares that I have, then we would own the entire supply of JASO stock. This in turn would make the stock price go through the roof.
That is another reason to buy stock instead of options in solar. The market caps are really small and buying stock makes a big difference for the share price. TSLA on the other hand has such a large market cap that it doesn't really matter if you buy 10 shares or some options (but it will matter if thousands of people buy a few dozen shares instead of options).
Options aren't really all that great. Especially since we are in the 6th year of a bull market. The bull market may even last another 12 months, but that will not do your J16's any good if JASO goes to $40 and then crashes back down to $10.
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Let me just add that I hold all of my JASO shares in non-margin accounts, so that my broker cannot lend them out ot shorts. This also puts upward pressure on the stock price.
If you all just buy options, calls or LEAPS, and not stock then the market makers are going to have a field day with you all. They can very easily manipulate the stock price to make sure that your calls go worhtless. When you buy options, you really do not make an impact on the underlying stock price. Instead you are hoping that someone else is going to buy the stock for your options to move up in value.
If all everyone did was buy options then the stock will not go up. It puts downward pressure on the stock, because the JASO believers (and trust me, there really aren't that many out there on Wall St.) are pouring their money into options instead of buying shares.
On the other hand, when you buy shares and hold them, then you are taking the supply of shares out of the market which puts upward pressure on the stock price. If you all bought shares instead of options, then that could make the stock price go up a lot quicker (to reach what I and all analysts view as fair value for the shares). But when you buy options it does not have that effect.
I know that you might be thinking that a couple hundred or thousand shares may not make a difference, but it really does. If you get a 100 people to buy 1000 shares, then it really puts a big dent into the share supply count and the stock will move up.
I myslef own a 5-digit number of shares in JASO myself, and I don't have a lot of buying power at all relative to Wall St. or even some of the people on this forum. But if there was only a couple thousand people on this planet (out of 7b+) that thought like me and bought the same amount of shares that I have, then we would own the entire supply of JASO stock. This in turn would make the stock price go through the roof.
That is another reason to buy stock instead of options in solar. The market caps are really small and buying stock makes a big difference for the share price. TSLA on the other hand has such a large market cap that it doesn't really matter if you buy 10 shares or some options (but it will matter if thousands of people buy a few dozen shares instead of options).
Options aren't really all that great. Especially since we are in the 6th year of a bull market. The bull market may even last another 12 months, but that will not do your J16's any good if JASO goes to $40 and then crashes back down to $10.
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Let me just add that I hold all of my JASO shares in non-margin accounts, so that my broker cannot lend them out ot shorts. This also puts upward pressure on the stock price.
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that's a good point. In the 'early' days of Tesla I was using 80% stock because the trade was so thin, the options (even the LEAPS) bid/ask was huge with correspondingly wild swings. Moved to 80% LEAPS after that (but at an equivalent stock hold not $ leverage). Similar with Apple in the early days.
Solars are right on the cusp imo and worthy of some well placed LEAPS- but it's important to balance it with a healthy stock position (in the same companies). Currently I'm at a 30%stock-70%LEAPS mix but carry an inordinate J16/J15 ratio position (75%). But I would not be in that strong a mix without the recent pullback in Solars which produced a remix from 70%-30%. In addition, spreading the load across 5 major solars (best-of-breed) companies. But all that's caveated with my belief that we won't see a recession for 2+ years even while the market slows from the last 5, but continue to grundge (is that a word?) forward- which could be all wrong and should've been out of the market all together! All that to context any advice from this corner! good luck gentleman and ladies alike
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