Short-Term TSLA Price Movements - 2013

[CyberDutchie]

Hello all.
I've got a question - actually several. I'm trying to review the past week and use it as a learning opportunity.

Background info.:

(...)

I sold in pre-market @ $174.80 (admittedly, not great).

(...)

I made three buys over the next hour or so to rebuild my position, with the low buy at $169.97 and the high at $171.18.

(...)

So, to my basic questions for the forum:

1. What are some general thoughts about how to use pre and after market trading? Are there some less than obvious pluses or negatives?

2. Given the lower end of pre-market on Thurs. 10/3 with a downward trend, why did the price go up to near $180 in the first 48 minutes of trading? Were these pre-set buys that did not factor in the previous days "inflammatory" news? If so, is this phenomenon a common occurrence?

Lastly, thanks to all for all the forward looking information provided here, as well as the opportunity to look back and learn from the historical context. I appreciate it greatly!

Others can answer your questions better then I, but just wanted to ask you to elaborate on why you felt compelled to sell in the first place? Were you expecting a much steeper decline, so you could buy in with more shares than you had before?

Given the price delta was only $5, probably not enough to justify having to pay short-term capital gain tax.

 

[Norse]

Do you guys in the US have an "America's Happiest Car Owners" annually or something? I think when that kind of report comes out TSLA will be rallying.

 

[brg2290]

Others can answer your questions better then I, but just wanted to ask you to elaborate on why you felt compelled to sell in the first place? Were you expecting a much steeper decline, so you could buy in with more shares than you had before?

Given the price delta was only $5, probably not enough to justify having to pay short-term capital gain tax.

Hi mulder1231. Good question. Thankfully, this account is a non-taxable (Roth) retirement account. I'm currently trading with Scottrade @ $7.00/trade, so the 4 trades (1 sell, 3 buys) cost me $28. And as I said in the original post, I didn't go all in @ $169.98 because the possibility of the Goldman Sachs report on the heels of the video combined with govt. funding questions made a more negative vector a possibility. Make sense?

I've been torn between the buy and hold long camp and the buy on the dips, sell on the peaks camp. In following this thread, I see people using different strategies to maximize their holdings / profits. I consider myself more of a long term guy than a day trader (but would like to add options to my playbook at some point). As I mentioned previously, it is only because I have been home recovering from hip surgery that I have been able to monitor the day to day trading closely. I have to admit, I actually wondered to myself "What would Bonnie and some of the other die hard longs think of people trading out and in at this time?" I felt a sense of vindication when I saw she had done the same, with much better timing than I had!

The mention of Scottrade leads me to an additional question. Scottrade charges $7 + $1.25 per contract for online options and $17 Option Assignment/Exercise Fee. If I'm remembering correctly, these fees sound awfully high compared to what some on the forum are paying. Comments and suggestions?

 

[Mario Kadastik]

If you want options go with interactive brokers. Good system that gets you better and faster trades and cheaper too.

 

[bonnie]

Hah @ 'what would Bonnie think'. fyi, my money is in Merrill Lynch Edge. I get 30 free trades per month (excess of 30 trades is 6.95 per trade), no other fees. There is a minimum balance, not sure what it is, but something to look at. Any time a fee has shown up for something, I protest and it magically disappears from the account.

I do move things around on my IRA where I don't have immediate tax consequences & am pleased with where it sits. But I don't touch my regular investment account because the tax consequences are just too much to face right now. I've used margin more than a few times and that has turned out to be a really smart decision. Different strategies for different accounts. I do work full-time in a pretty intense job, which means there are multiple days where I am in all-day meetings and cannot even sneak a peek at the market. Some of the strategies in this thread require much more focused attention than I can give at this point in my life. But my returns are more than healthy (my assigned broker at ML says he follows me - hah!), this year so far has put me 5 years ahead on my retirement plans, including a major house remodel in the spring and my Model X (hopefully) in the fall. So no complaints at all.

At heart, my investment strategy IS to stay long. That won't change. But I do gamble a little here and there on the side.

 

[sleepyhead]

Hello all.
I've got a question - actually several. I'm trying to review the past week and use it as a learning opportunity.

Background info.:
I followed the news of the Baird revision, then the video of the incident (not going to write f***!). Recently, I had been trying to protect on the downside, but don't have options trading approval (or knowledge basis) yet. I previously had a trailing stop limit set with a wide margin - 19%, to protect downside when I was out of commission for awhile from a medical procedure, but removed it with the more recent opportunity for real time monitoring.

This past week: I did not sell on Wednesday 10/2, but monitored the board for sentiment and waited for Tesla response. Closing price on 10/2 was pretty decent @ ~ $180.95, and had actually come up from a daytime low around $175. It became clear the "issue" would take several days to sort out before an official release. I monitored after hours trading on 10/2, and my recollection (I can't find historical charting for after or pre-market trading?) is that after hours ended somewhere ~ $175? Sometime before lights out, I read sleepy's post where he correctly suggested one scenario as - set a limit buy at $171.33 and that we could test $170 several times. I've generally found sleepy's takes to be golden (perhaps username "sleepyhead" should consider change to "soothsayer" or some such), so I tried to formulate a plan of action based on this assumption.

I didn't sleep well Wed. night / Thurs. morning, and ended up getting up at 3 a.m. Pacific time to check pre-market. Again, my recollection is that TSLA continued to head south, so I sold in pre-market @ $174.80 (admittedly, not great). In line with the pre-market decline, Thursday opening started out about $173.28. I'm sitting there with my cup of coffee with the expectation that the trendline would continue down. Instead, over the next few minutes, the price ticked up to $179.26 @ 9:48 a.m. I've been sitting there waiting for a buy opportunity ~ 170, and instead it's running the other direction!

Bolstered by sleepy's track record, and still with Goldman Sachs / Govt. Shutdown / debt ceiling uncertainty, I resisted the temptation to succumb my fearful "buy in before it's too late" mentality. As you all know, the decline from there was steady, bottoming out at where - $168.20 or so? I wasn't sure this was the bottom, so I made three buys over the next hour or so to rebuild my position, with the low buy at $169.97 and the high at $171.18. I felt pleased about protecting some of the value of my position given the limited (no option privileges) tools at my disposal, but obviously in hindsight things could have gone better (like reacting cat quick like Bonnie and other longs to sell on the news of the incident, then buying back in near the low).

So, to my basic questions for the forum:

1. What are some general thoughts about how to use pre and after market trading? Are there some less than obvious pluses or negatives?

2. Given the lower end of pre-market on Thurs. 10/3 with a downward trend, why did the price go up to near $180 in the first 48 minutes of trading? Were these pre-set buys that did not factor in the previous days "inflammatory" news? If so, is this phenomenon a common occurrence?

Lastly, thanks to all for all the forward looking information provided here, as well as the opportunity to look back and learn from the historical context. I appreciate it greatly!

1. I have never traded pre or after market; don't look too much into the price changes that happen during those hours unless it is for a big event. Some times you can take advantage of after hours trading: When DB issued research report and new $200 price target, this info came out around 4:30 pm just after market close. TSLA went from $166 to $167 and slowly up to $169 by end of AH. At $167 I was posting here to buy at this price because it is a steal after such a research report comes out and some people did buy and the stock went up to $178 the next day. Those are the situations when you want to use pre and after hours to your advantage. Otherwise stay away because there is no liquidity.

2. That is the definition of volatility: some people already knew about the fire during market hours and sold On 10/2, while some others only found at after market close on 10/2 and started selling on 10/3. The initial sellers who were happy with TM's statement started buying while the others started selling leading to high volatility.

 

[ckessel]

If you want options go with interactive brokers. Good system that gets you better and faster trades and cheaper too.

IB is crazy cheap compared to others, so much so I'm wondering why. What do you give up for that low cost?

 

[hershey101]

IB is crazy cheap compared to others, so much so I'm wondering why. What do you give up for that low cost?

I personally find their platform not to be super user-friendly to people that are just starting off with trading stocks/options in the sense that its slightly more complex to enter trades, calculate p&l of potential trades, look at greeks & order books etc. I also don't like using the java applet they have, and personally prefer an website because I'm constantly on different computers and don't want to download java or the applet on each machine, however their website system is very bare-bones...

 

[Mario Kadastik]

In addition to the java applet they also have an iPad version which is quite decent and an iPhone version that's relatively decent. But yes, it's a good system if you already know what you're doing. What I miss though are the true option greeks. The only one it does show is delta, but not gamma, theta etc. Otherwise it's quite neat and their smart routing algorithms seem very good. Not sure I've had two consecutive orders traded on the same exchanges

 

[Auzie]

While we all eagerly wait for the market to open, here is some interesting info on solar car race across Australia, happening from 6 Oct to 13 Oct. http://www.worldsolarchallenge.org/about_wsc_2013/overview
Solar cars from all over the world (http://www.worldsolarchallenge.org/about_wsc_2013/2013_team_list) travel from Darwin to Adelaide, approx. 3000km, propelled by solar power only. Cars are allowed a nominal 5kW hours of stored energy. No night travel. No superchargers along the route. Only sun in abundance everywhere.

- - - Updated - - -

 

[TSLAopt]

In addition to the java applet they also have an iPad version which is quite decent and an iPhone version that's relatively decent. But yes, it's a good system if you already know what you're doing. What I miss though are the true option greeks. The only one it does show is delta, but not gamma, theta etc. Otherwise it's quite neat and their smart routing algorithms seem very good. Not sure I've had two consecutive orders traded on the same exchanges

This is not true, you can get gamma, theta, and vega in the option trader. Also in the Risk Navigator tool there is much more you can look at, such as Delta with a capital "d" as well as Value at Risk and other option/risk metrics other platforms don't have. Also there are hypothetical scenarios you can put in your positions in their "custom scenario" tool within the Risk Navigator

also in the option trader you can see implied volatility and change in implied volatility from yesterday's close.

 

[Mario Kadastik]

This is not true, you can get gamma, theta, and vega in the option trader. Also in the Risk Navigator tool there is much more you can look at, such as Delta with a capital "d" as well as Value at Risk and other option/risk metrics other platforms don't have. Also there are hypothetical scenarios you can put in your positions in their "custom scenario" tool within the Risk Navigator

also in the option trader you can see implied volatility and change in implied volatility from yesterday's close.

Hmm, I guess I need to seriously dig deeper in the tool But you cannot have in your watchlist the extended greeks, only delta. Also, using the mosaic format at least is a bit annoying because opening two or more charts it auto-changes to what every you click on on all charts. So if I'm looking at TSLA and click on AAPL I'll get Apple chart in all charts I guess it's configurable somewhere but I didn't find it per chart as I'd like to keep one of them still auto changing to what ever I click to. Anyway, this is moving off topic

 

[anon]

Also, using the mosaic format at least is a bit annoying because opening two or more charts it auto-changes to what every you click on on all charts.

You can control that with the colored symbols in the top right corner - you can put the individual charts/displays into groups that change together.

 

[ckessel]

In addition to the java applet they also have an iPad version which is quite decent and an iPhone version that's relatively decent. But yes, it's a good system if you already know what you're doing. What I miss though are the true option greeks. The only one it does show is delta, but not gamma, theta etc. Otherwise it's quite neat and their smart routing algorithms seem very good. Not sure I've had two consecutive orders traded on the same exchanges

Cool, thanks. We're off topic, but thanks I sent TD Ameritrade an email last night saying "Hey, given I'm trading more, can TD Ameritrade give me a more competitive commission schedule?". The dropped the fees from 9.99 to 7.95 per trade. Not a killer reduction, but enough to keep me from going anywhere right away outside of IB that wasn't too much more than the competitors.

 

[borat99]

I know TD Ameritrade can do $5 per trade for stock because that's what my rate has been since thinkorswim. They can also do $1.50 per options contract flat instead of $9.99 + $0.75 per contract. I'll give them a call tomorrow to see if they can be as competitive as IB.

 

[ckessel]

I know TD Ameritrade can do $5 per trade for stock because that's what my rate has been since thinkorswim. They can also do $1.50 per options contract flat instead of $9.99 + $0.75 per contract. I'll give them a call tomorrow to see if they can be as competitive as IB.

Those rates would be nice. What'd really be nice is a better margin rate. TD seems to charge a very high margin interest.

 

[Jonathan Hewitt]

Back to short term talk, I'm thinking tomorrow we'll see a steady move back into the $180s based on Elon's blog released Friday afternoon. Biggest reason why this may not happen is another analyst downgrade, particularly a GS downgrade. People have had all weekend to digest what Elon wrote and I think most people are now thinking the fire is a misevent, even the owner of the car thought it was basically a freak accident. I've been joking the last couple months that all Tesla needs is a fire and there goes the company, but we had a fire and in the big scheme of things it barely affected the stock. A repeat event may have more effect but for now I think the stock is going to be as strong as it has ever been.

Sometime between now and earnings we'll probably see a return to the $190s, possibly testing $200 at some point. Personally, I would probably rather not see $200 before earnings as it will probably be a hard wall mentally for investors to get over and will require a good catalyst to get over. I think earnings could be that catalyst. If we breach it before earnings it could result in a sell on the news effect.

Anyone thinking along the same lines?

 

[MartinAustin]

Anyone thinking along the same lines?

Yes. Basically this has strengthened the stock. It has removed a big "unknown" about the car... the Volt and Fisker cars had fires and we saw the investigations and results that followed, and IMO those cars were not helped.

We'd never seen this process for the Model S, which has a radically different battery design from the other cars.

Now people can't wonder what will happen... because it has happened. The result was a lot of news coverage, but not much damage to the company IMO, so actually worked out pretty well.

I believe we will be back at $190 by the end of this week and looking closely at $200. Q3 earnings are still a month away! (right?) Could we be at $225 by then?

BTW we should expect TSLA to fall in the day or two trading days prior to Q3 announcement, so that stockholders who are worried about the results want to make sure they can take some profits. For the more confident among us, that could be a great time to buy (right before the announcement). If you are looking to sell prior to the results, I think doing it the day before might work better than later.

 

[Mario Kadastik]

If you want to take profits just before earnings with options you might want to wait until the very last moment instead of the day before because the IV usually goes up dramatically just before earnings and may well change minute to minute until closing bell on the day of earnings. The IV premium hence might be way better (some people play purely on deflating IV as a play by selling OTM call+put with hopes of collapsing IV profit, works well as long as there is no huge move)

 

[Jack6591]

Strengthening the Stock.

Yes. Basically this has strengthened the stock. It has removed a big "unknown" about the car... the Volt and Fisker cars had fires and we saw the investigations and results that followed, and IMO those cars were not helped.

We'd never seen this process for the Model S, which has a radically different battery design from the other cars.

Now people can't wonder what will happen... because it has happened. The result was a lot of news coverage, but not much damage to the company IMO, so actually worked out pretty well.

I believe we will be back at $190 by the end of this week and looking closely at $200. Q3 earnings are still a month away! (right?) Could we be at $225 by then?

BTW we should expect TSLA to fall in the day or two trading days prior to Q3 announcement, so that stockholders who are worried about the results want to make sure they can take some profits. For the more confident among us, that could be a great time to buy (right before the announcement). If you are looking to sell prior to the results, I think doing it the day before might work better than later.

I agree that the stock is stronger now as result of the fire. I also believe that the resolve of the shorts is stronger as well. Not that it ever wavered. I'm wondering what the short percentage is today???

I expect a strong day on Monday. On Tuesday, I'm anticipating the typical short attack.

It will be an interesting week. My SWAG, a small gain for the coming week.