Short-Term TSLA Price Movements - 2013

[mershaw2001]

Wow that was two great trades! It is the most bullish trade combo you could have.

I did similar thing in Q1, selling OTM puts to finance the cost for the calls. As long as TSLA does not drop belows the strike price, which I am quite confident, at least I will be even with unlimited upside.

Your trades is bolder as the put is deep ITM $200, which could be hit right there. You will make the most gain if TSAL does well!

Kevin and Sunnyday, I use margin a lot and I'm confused by your use of "selling puts to finance buying calls". Every time I sell a put, since it's on the margin, a dummy placeholder is put in my account and i can't use the funds from the put. I am curious how you use the funds immediately to buy calls- or are you just using "to finance" as a way of saying you did both trades simultaneously? I didn't think a broker would let you use the proceeds that are tied up based on the margin requirements of the put until the option expired.

 

[Sunnyday]

Wow that was two great trades! It is the most bullish trade combo you could have.

I did similar thing in Q1, selling OTM puts to finance the cost for the calls. As long as TSLA does not drop belows the strike price, which I am quite confident, at least I will be even with unlimited upside.

Your trades is bolder as the put is deep ITM $200, which could be hit right there. You will make the most gain if TSAL does well!

It was a scary trade. Even though I have more riding with the shares I own outright, the options are more of a nail biter. I forgot to mention I established the trade right before Q2 earnings were announced. I've been dabbling in options for 30 years, but I've NEVER put so much into calls, and it's my first time selling puts to open. I rationalized it by using bank's money to finance my calls. I also mentally prepared myself to be purchasing the shares at $200 in Jan 2015 if things go south. An even more bullish trade would have been to buy calls that were $30 or $40 out of the money, but when I ran the numbers with various outcomes, the in the money calls offered a lot less risk but still solid upside even if the put doesn't expire worthless. My original idea for the trade was to sell enough long term puts to pay for the purchase of a Model S. Then I decided to put the $$ to work with calls, and delayed my purchase until January '14. This will be a nail-biter Q3. I'm confident it will be a blowout quarter, but what Elon says about the future will decide if we rocket or bomb post earnings.

 

[ckessel]

Not really ckessel. I regularly sell naked puts and the margin requirement is ~1-2k per contract. This is dynamic however so if the stock moves down the requirement moves up and at some point you might get a margin call

I'm "tier 2-standard", which I think means I can only use margins for buying, not writing, options.

 

[kevin99]

I would expect a bigger drop from $189.5, but it didn't! If I am disappointed, what would you think of the shorts? Devastated?

 

[2Pearls]

Hi folks. I've been playing whack-a-troll at Seeking Alpha using info from this forum and elsewhere. I haven't had much to contribute here, but now I have a question.



TSLAopt, I hope you're right, but what makes you say this? Intuition? Any hard data?

Myself, I think it's fine to care about Tesla's valuation, as long as one estimates it correctly. If one does that, it is likely still undervalued.

Dear PeterJA, just a quick note of Thanks for defending me on SA. I actually got kicked off last week for defending Tesla and I saw that you backed me up on some of my back and forth comments with Reel Ken...so, Thanks. I was Maybetoday on SA, but no longer. It is brutal on SA with the amount of shorts that continue to mislead and talk untruths about Tesla. good Luck fighting the battle for the cause!

 

[kevin99]

Kevin and Sunnyday, I use margin a lot and I'm confused by your use of "selling puts to finance buying calls". Every time I sell a put, since it's on the margin, a dummy placeholder is put in my account and i can't use the funds from the put. I am curious how you use the funds immediately to buy calls- or are you just using "to finance" as a way of saying you did both trades simultaneously? I didn't think a broker would let you use the proceeds that are tied up based on the margin requirements of the put until the option expired.

"selling puts to finance buying calls" is just a figure of speech: In case TSLA did not move up fast and stay where it is, at least I collect the premium from selling the puts and lose the premium on buying the calls. So I am even.

You are right on the margin. Selling put does not make you buy more calls, it is about managing the outcome.

 

[farzyness]

Yeah, I know. Too much time on my hands.

But all these charts and "channels" and, well, I was curious where it led by 2015. So I hacked this together (emphasis on hack) during lunch. Ketchup on keyboard and all.

View attachment 31466

Yep, methinks holding until 2016+ is still the plan.

And now back to your regularly-scheduled short-term thread.

So vs. my estimations for TSLA through 2023, the highest point of your channel by the end of 2014 puts TSLA at a P/E of about 110. Justified? Hell no. Possible? Sure! Will it actually happen? Who knows. Am I betting on it? Get back to me around 2018

 

[Kipernicus]

A mandatory link after such an extrapolation

xkcd: Extrapolating

And don't forget the wisdom of Disco Stu:

"Disco record sales were up 400% for the year ending 1976. If this trend continues....heyyyyyy!"

 

[Sunnyday]

Kevin and Sunnyday, I use margin a lot and I'm confused by your use of "selling puts to finance buying calls". Every time I sell a put, since it's on the margin, a dummy placeholder is put in my account and i can't use the funds from the put. I am curious how you use the funds immediately to buy calls- or are you just using "to finance" as a way of saying you did both trades simultaneously? I didn't think a broker would let you use the proceeds that are tied up based on the margin requirements of the put until the option expired.

Mershaw, I've got a margin account at Schwab. I only buy what I have cash for, so I don't use the margin (I learned a painful lesson in the 2008 market plunge). However, this is still not far removed because the trade is secured by my TSLA stock held long in the account, and the Put appears in my account as a negative value. At the time of the trade, the liability I took on (being forced to purchase at $200 in 15 months) represented 40% of my TSLA holdings at $140. If I didn't know I could come up with fresh cash by the end of this year to cover a worst-case-scenario, I wouldn't have done this because I don't want to jeopardize my core holding. I wouldn't recommend this trade to most people. I have a high tolerance for risk. When it was trading at $140 I had high confidence it would be above $200 by Jan 2015. I had no idea we'd get so close so fast!

 

[james_chen70]

Kevin and Sunnyday, I use margin a lot and I'm confused by your use of "selling puts to finance buying calls". Every time I sell a put, since it's on the margin, a dummy placeholder is put in my account and i can't use the funds from the put. I am curious how you use the funds immediately to buy calls- or are you just using "to finance" as a way of saying you did both trades simultaneously? I didn't think a broker would let you use the proceeds that are tied up based on the margin requirements of the put until the option expired.

Hello mershaw2001,

You are right in saying that some funds will be tied up, since you are short puts. Shorting puts have a risk of being assigned the underlying shares. So your broker will naturally require you to have some funds to be able to take delivery of the shares.

When they say "selling puts to finance buying calls", they mean they actually have surplus funds to actually take delivery of the underlying shares.

For example... Back after Q2 ER, I did a synthetic long:

Long Jan 2015 150 Calls
Short Jan 2015 150 Puts

By doing this, I am essentially saying TSLA will go up. It's as if I am long TSLA at 150. I paid for the 150 Calls by the proceeds from selling the 150 Puts.

I am very conservative. In my account, I actually have enough funds to take delivery of TSLA at 150, if TSLA does drop below 150 by Jan 2015.

With a margin account, I can have less funds than the 100% of the funds needed to take delivery of TSLA at 150. But I'd like to sleep at night. Having enough funds to take delivery is a good feeling to have. Sure I do not make as much, but I also need to protect my emotional capital, which is just as important to me.

Does this help you? Hope it does.

Feel free to post more questions. But you probably want to be posting to the other threads. I recall there is a thread on options.

Good luck!

- - - Updated - - -

I would expect a bigger drop from $189.5, but it didn't! If I am disappointed, what would you think of the shorts? Devastated?

On Seeking Alpha, there are still shorts saying how TSLA is doomed to drop, and even one person prefers to have 10 Porsches than 1 Tesla. I think he meant the stock, not the car. These shorts sound like they are really smart, with charts, matrices, Citron research notes, etc. Devastated? Maybe. But I'm yet to see a short admit that they are wrong and move on. Oh wait, there was one, Cooper Vegas on Stocktwits. He was short and decided the short was not working. At least one short was sensible.

As long as TSLA has a large short interest, it's a good thing for the longs.

And come on, Kevin, please don't be too disappointed with TSLA closing within $1.04 of the ATH. This bull market is just sooooo much fun.

 

[kevin99]

Hello mershaw2001,

You are right in saying that some funds will be tied up, since you are short puts. Shorting puts have a risk of being assigned the underlying shares. So your broker will naturally require you to have some funds to be able to take delivery of the shares.

When they say "selling puts to finance buying calls", they mean they actually have surplus funds to actually take delivery of the underlying shares.

For example... Back after Q2 ER, I did a synthetic long:

Long Jan 2015 150 Calls
Short Jan 2015 150 Puts

By doing this, I am essentially saying TSLA will go up. It's as if I am long TSLA at 150. I paid for the 150 Calls by the proceeds from selling the 150 Puts.

I am very conservative. In my account, I actually have enough funds to take delivery of TSLA at 150, if TSLA does drop below 150 by Jan 2015.

With a margin account, I can have less funds than the 100% of the funds needed to take delivery of TSLA at 150. But I'd like to sleep at night. Having enough funds to take delivery is a good feeling to have. Sure I do not make as much, but I also need to protect my emotional capital, which is just as important to me.

Does this help you? Hope it does.

Feel free to post more questions. But you probably want to be posting to the other threads. I recall there is a thread on options.

Good luck!

- - - Updated - - -



On Seeking Alpha, there are still shorts saying how TSLA is doomed to drop, and even one person prefers to have 10 Porsches than 1 Tesla. I think he meant the stock, not the car. These shorts sound like they are really smart, with charts, matrices, Citron research notes, etc. Devastated? Maybe. But I'm yet to see a short admit that they are wrong and move on. Oh wait, there was one, Cooper Vegas on Stocktwits. He was short and decided the short was not working. At least one short was sensible.

As long as TSLA has a large short interest, it's a good thing for the longs.

And come on, Kevin, please don't be too disappointed with TSLA closing within $1.04 of the ATH. This bull market is just sooooo much fun.

Haha James you misread me. I am disappointed that it did not drop big like other stocks! I won't be this greedy demanding ath everyday.

The more of these bull days continue, the more chance for it to pop somehow. I don't like erratic price movement.

Sorry on mobile. Hard to shorten the quote.

 

[PeterJA]

Dear PeterJA, just a quick note of Thanks for defending me on SA. I actually got kicked off last week for defending Tesla and I saw that you backed me up on some of my back and forth comments with Reel Ken...so, Thanks. I was Maybetoday on SA, but no longer. It is brutal on SA with the amount of shorts that continue to mislead and talk untruths about Tesla. good Luck fighting the battle for the cause!

You're welcome. You have joined an elite cadre of Tesla warriors: the Banned From SA Club. I was banned for a week. JRP3 was banned permanently from Petersen articles, Julian Cox was banned permanently from the whole site. A few others I forget at the moment. Maybe we should get matching tattoos.

 

[TSLAopt]

You're welcome. You have joined an elite cadre of Tesla warriors: the Banned From SA Club. I was banned for a week. JRP3 was banned permanently from Petersen articles, Julian Cox was banned permanently from the whole site. A few others I forget at the moment. Maybe we should get matching tattoos.

We should get a group together and post an article on Mötley Fool entitled something like "TSLA bulls banned from Seeking Alpha site regularly"
i know someone working for The Mötley Fool and can see if we can figure that out, let me know and I will look into it.

 

[2Pearls]

You're welcome. You have joined an elite cadre of Tesla warriors: the Banned From SA Club. I was banned for a week. JRP3 was banned permanently from Petersen articles, Julian Cox was banned permanently from the whole site. A few others I forget at the moment. Maybe we should get matching tattoos.

We could certainly afford some nice tattoos with our profits from Tesla. On a serious note, what I cannot figure out is...that many of these posters like Reel Ken and Logical Thought seem like smart people. I certainly understand that Tesla is overvalued based on the present 23k cars that will be bought this year, however, Tesla is ramping up very nicely, growth is continuing as more and more people get to know and test drive Tesla and purchasing the car. The market for Tesla is in it's infancy with so much potential. How can these people not see the future of Tesla...and, more importantly, some of these people have been short for awhile and taking a beating...you would think they would learn? Am I missing something?

- - - Updated - - -

I think that would be a great idea...and, we should expose SA as a very biased site as most ( not all) of our posts are defending Tesla and fighting their sarcastic remarks with more sarcasm right back at them. Although, Motley Fool also seems to have very many negative Tesla articles that are misinformed as well.

 

[mershaw2001]

We could certainly afford some nice tattoos with our profits from Tesla. On a serious note, what I cannot figure out is...that many of these posters like Reel Ken and Logical Thought seem like smart people. I certainly understand that Tesla is overvalued based on the present 23k cars that will be bought this year, however, Tesla is ramping up very nicely, growth is continuing as more and more people get to know and test drive Tesla and purchasing the car. The market for Tesla is in it's infancy with so much potential. How can these people not see the future of Tesla...and, more importantly, some of these people have been short for awhile and taking a beating...you would think they would learn? Am I missing something?

- - - Updated - - -

I think that would be a great idea...and, we should expose SA as a very biased site as most ( not all) of our posts are defending Tesla and fighting their sarcastic remarks with more sarcasm right back at them. Although, Motley Fool also seems to have very many negative Tesla articles that are misinformed as well.

I went short on a stock. I had a good reason to, large off balance expenses. The rest of the world didn't agree with me and I doubled down. I stood firm and lost more Money. I eventually lost a ton, but it was because I was stubborn and thought I knew better than everyone else. These guys are smart, but perhaps their own success is their downfall, and now they take to SA to justify their position and try to convince the world of the failures of Tesla.

 

[PeterJA]

Reel Ken and Logical Thought seem like smart people...

I've seen LT fabricate technical data based on his unresearched assumptions. RK got caught confusing a numerator and denominator, then lied about it twice in a public forum where I could easily expose the lies if I gave a ****. I wouldn't call that smart.

- - - Updated - - -

I've seen LT fabricate technical data based on his unresearched assumptions. RK got caught confusing a numerator and denominator, then lied about it twice in a public forum where I could easily expose the lies if I gave a ****. I wouldn't call that smart.

Whoops, I've broken some rules already. I'll try to stay non-vulgar and on-topic.

 

[Causalien]

We could certainly afford some nice tattoos with our profits from Tesla. On a serious note, what I cannot figure out is...that many of these posters like Reel Ken and Logical Thought seem like smart people. I certainly understand that Tesla is overvalued based on the present 23k cars that will be bought this year, however, Tesla is ramping up very nicely, growth is continuing as more and more people get to know and test drive Tesla and purchasing the car. The market for Tesla is in it's infancy with so much potential. How can these people not see the future of Tesla...and, more importantly, some of these people have been short for awhile and taking a beating...you would think they would learn? Am I missing something?

- - - Updated - - -

I think that would be a great idea...and, we should expose SA as a very biased site as most ( not all) of our posts are defending Tesla and fighting their sarcastic remarks with more sarcasm right back at them. Although, Motley Fool also seems to have very many negative Tesla articles that are misinformed as well.

Being smart does not mean you can succeed in the stock market.
The definition of smart itself is fuzzy.
Pure Book smart will get you killed in the stock market because you ignore the gut.
Pure Street smart will get you killed in the stock market because you can't do math.

I've seen so many dumb people making hail Mary plays and succeed. I believe, sometimes, you need to be stupid and ignore consequences of your conviction trade. Being smart makes you more likely to second guess your own conviction.

 

[2Pearls]

Being smart does not mean you can succeed in the stock market.
The definition of smart itself is fuzzy.
Pure Book smart will get you killed in the stock market because you ignore the gut.
Pure Street smart will get you killed in the stock market because you can't do math.

I've seen so many dumb people making hail Mary plays and succeed. I believe, sometimes, you need to be stupid and ignore consequences of your conviction trade. Being smart makes you more likely to second guess your own conviction.

Causalien, very good points. Although they seem to not be second guessing their short positions..tesla, onward and upward. Let's put some more hurt on the shorts this next month!

 

[justdoit]

10 stocks big money is buying: Cramer

This is really interesting. Wonder if this is what's providing the upwards buying pressure the past few days and if we will see a slow down/sell off the next few?

 

[fjm9898]

Well i guess we will see if Cramer calls the pull back in Tesla. I sold some Calls as took profits, so i am hoping Cramer is right. If he is right because of the fund managers or just right because of a pull back for another reason, your charts here, who cares why