Social Chat - Short Term TSLA Movements

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Do most people have stop loss orders during extended hours as well, though?

You can only do limit orders AH, not market. Correct me if I'm wrong but that is how it is on Scottrade. In today's situation, if you didn't have a limit order set as soon as you were allowed to AH, the price fell so fast you would not have time to input it before it was already down $15.

 

[uselesslogin]

Well, works for me guys. Sorry for the bullish option players although it ain't over yet. Back in August I sold some covered calls it looks like I have a good shot at not only keeping that equity position but also pocketing the risk premium. I was doubting that when the stock was $195 but here we are. If things go down enough the next few days I might even be buying some June calls. I think the fun will be back we just have to be patient.

 

[Gtoffo]

And if a company goes bankrupt, stock is worthless.

I guess we'll fundamentally disagree. It's a steady ramp from way deep ITM to way deep OTM on risk. That's what underpins the pricing for the options. To suggest deep ITM is low risk, then high risk partially ITM, then lower risk again at ATM, then higher again as you go OTM...that's simply wrong.

Risk of ending out of the money clearly increases (although not linearly at all) as you move from ITM to OTM....but the risk of your option strategy is completely different depending on so many different factors.
Consider this (extremely) simplified example: let's say 1 weekly ATM option costs 2$ (time value) while 1 10$ ITM option costs 12$ (10$ intrinsic+2$ time value). If stock expires 2$ below where it is now you will have lost 2$ in one case an 4$ in the other. Percentage wise the loss for the ITM option is much lower (you lost 100% of the ATM option)....but in absolute terms the story is much different.... and if the stock went down 10 dollars in one case you lost 2$ while in the other you have 12 full dollars to loose....much more risk for the same potential reward.

But there are different option threads around TMC where this topic would be addressed better (and has probably already been covered). This conversation isn't helping any of the other guys.

 

[FANGO]

Risk of ending out of the money clearly increases (although not linearly at all) as you move from ITM to OTM....but the risk of your option strategy is completely different depending on so many different factors.
Consider this (extremely) simplified example: let's say 1 weekly ATM option costs 2$ (time value) while 1 10$ ITM option costs 12$ (10$ intrinsic+2$ time value). If stock expires 2$ below where it is now you will have lost 2$ in one case an 4$ in the other. Percentage wise the loss for the ITM option is much lower (you lost 100% of the ATM option)....but in absolute terms the story is much different.... and if the stock went down 10 dollars in one case you lost 2$ while in the other you have 12 full dollars to loose....much more risk for the same potential reward.

But there are different option threads around TMC where this topic would be addressed better (and has probably already been covered). This conversation isn't helping any of the other guys.

Gtoffo, the problem is that you are assuming people would buy the same number of contracts at different strikes, rather than spending the same amount. If one spends a fixed amount, which is how nearly everyone will make their decisions anyway, then more itm = less risk.

It's like saying Priceline has more to lose than Apple, because their share price is higher. That's just not how it works.

 

[Gtoffo]

Gtoffo, the problem is that you are assuming people would buy the same number of contracts at different strikes, rather than spending the same amount. If one spends a fixed amount, which is how nearly everyone will make their decisions anyway, then more itm = less risk.

It's like saying Priceline has more to lose than Apple, because their share price is higher. That's just not how it works.

The beauty of options is it can work (almost) however you want it to work :wink: The bottom line is, he could have had a similar/better return profile with less capital and less risk by investing more wisely. I'm just trying to give him some advise for the future... he's free to ignore it!

Can we go back to our regular group hug? I'm afraid we all need it.......
How are people coping with the probable BIG drop?

 

[Mario Kadastik]

Can we go back to our regular group hug? I'm afraid we all need it.......
How are people coping with the probable BIG drop?

For sure need it Losing 20-30% of my portfolio total today is tough. I'm fairly certain that I will not touch the March 2014 and January 2015 options. The march ones were Q3 and Q4 plays combined and are $180 strike with break even at $208 right now. If I buy more of those over time, then the cost basis will lower and before march I will likely hedge them if we have a run somewhere. The January 2015 are the same.

However I have ca 12k$ in November + December options and hedged for ca 3.4k$ yesterday and monday so my max loss is ca 8.6k$ or ca 25% of portfolio. I have not decided what is the best course. Should I sell at market open the November $170's hoping for a 30-40% residual value or should I hold on hoping for a rally later this week/next week. I'm not certain it will happen. I might hold on for the first hour to see what happens. Over half of the risk is in December calls at $175, those I think will retain some value throughout today so it's likely I'll hold on to those to see where we go. If we start dropping I'll offload them most likely and just consider it a loss and take the money I took out for possible plays into Q4 and long term. But it hurts. So much about my B-day present from TSLA :/

 

[Gtoffo]

For sure need it Losing 20-30% of my portfolio total today is tough. I'm fairly certain that I will not touch the March 2014 and January 2015 options. The march ones were Q3 and Q4 plays combined and are $180 strike with break even at $208 right now. If I buy more of those over time, then the cost basis will lower and before march I will likely hedge them if we have a run somewhere. The January 2015 are the same.

However I have ca 12k$ in November + December options and hedged for ca 3.4k$ yesterday and monday so my max loss is ca 8.6k$ or ca 25% of portfolio. I have not decided what is the best course. Should I sell at market open the November $170's hoping for a 30-40% residual value or should I hold on hoping for a rally later this week/next week. I'm not certain it will happen. I might hold on for the first hour to see what happens. Over half of the risk is in December calls at $175, those I think will retain some value throughout today so it's likely I'll hold on to those to see where we go. If we start dropping I'll offload them most likely and just consider it a loss and take the money I took out for possible plays into Q4 and long term. But it hurts. So much about my B-day present from TSLA :/

I'M heavy on margin also so I'll be probably getting a call from my broker today..... will be forced to sell something (not sure if I'll be selling TSLA though...). It would be amazing if we could open with a loss of less than 5%...that might keep us floating and not just sinking all the way down....

 

[Mario Kadastik]

I'M heavy on margin also so I'll be probably getting a call from my broker today..... will be forced to sell something (not sure if I'll be selling TSLA though...). It would be amazing if we could open with a loss of less than 5%...that might keep us floating and not just sinking all the way down....

The IV will crunch from 98% to ca 60% within hours. That alone will remove 40-50% of the options price. Then the $20 move down will remove most of the rest. I'd be surprised if the Nov $170 calls would be worth more than $2-3 a pop. The december ones might survive a bit better as their IV was ca 65%, which will not crunch that hard, maybe drop 10% so there it's mostly the stock price drop that will kill them from $16.5 to say $6 or so. That's one of the reasons I'm going to likely keep them around a bit to see where the stock goes, but I have hard time thinking what to do with the November options. Sell 1-2 at market open and keep 1-2 running to see how it goes...

 

[Gtoffo]

That's one of the reasons I'm going to likely keep them around a bit to see where the stock goes, but I have hard time thinking what to do with the November options. Sell 1-2 at market open and keep 1-2 running to see how it goes...

Yeah not an easy day... I might hold on to my spreads.... most of them have the lower leg at 175$ which might still be doable if we recover. Some are 190+$ and will just be a complete writeoff I'm afraid. I'm just worried that the 10$ loss is just the beginning.....we might se much lower numbers than 160$ today if the market panics

 

[Mario Kadastik]

Well we can all compute what our options will be worth around current price:

Option Price Calculator

I used IV of 60% and got that the Nov 170 will be ca $2, Dec $175 ca $6-7.

 

[Gtoffo]

Well we can all compute what our options will be worth around current price:

Option Price Calculator

I used IV of 60% and got that the Nov 170 will be ca $2, Dec $175 ca $6-7.

Wow....that was intense.....so the market decided for me.....I'm holding on all my options as selling now would make no sense at all :scared:

I'm not too sure how.....but so far I'm surviving without a margin call....I guess the Bull Call Spreads protected me from the worst of it...

 

[ckessel]

Wow....that was intense.....so the market decided for me.....I'm holding on all my options as selling now would make no sense at all :scared:

Yea, no idea if it's worth dumping now at 95% loss or waiting a couple days and hoping for a mere 90%. No, that's not being facetious. At least the options are for the 16th rather than the 8th so I can actually wait a day or two.

Edit: Or, after I check email at work, the stock can drop enough to make my decision irrelevant.

 

[Gtoffo]

This is insane...... or are we the crazy ones?

 

[v12 to 12v]

Looks like the buyers are arriving.

 

[Chickenlittle]

I thought it strange but never listened to a conference call without introductory comment/review of performance. Just threw it open to questions. Anyone else see anything like this. Last 4 tsla cc had a story to tell this one let everyone else write it

 

[hoang51]

I thought it strange but never listened to a conference call without introductory comment/review of performance. Just threw it open to questions. Anyone else see anything like this. Last 4 tsla cc had a story to tell this one let everyone else write it

I thought it was strange but dismissed it because there's no point of rehashing what can be read from the shareholder's letter. Giving more time to questions should be a priority, in which case I think it is a good thing. If they took out the time to rehash what was found in the letter, it'll be less time to take questions and give out decent answers that may help out the company's image.

- - - Updated - - -

Looks like the buyers are arriving.

Yeah, since $146's. I'm hoping that TSLA can recover towards $160, but it might take a while for that. I even missed buying puts this morning and missed the $146 buy in for the way back up. Oh well. Can't always time the highs and lows. It seems that TSLA will recover, just like Facebook did. It tanked towards $47 and bounced back up and FB touched $50s yesterday and today, but it's trading a little sideways for the time being.

 

[Robert.Boston]

I'm really annoyed -- I'm shifting my accounts from TD Ameritrade to Vanguard, and so my TDA accounts are in lock-down, but the securities/money aren't yet available at Vanguard. Argggg.... Such a great opportunity to buy long-dated LEAPS today.

 

[Chickenlittle]

I'm really annoyed -- I'm shifting my accounts from TD Ameritrade to Vanguard, and so my TDA accounts are in lock-down, but the securities/money aren't yet available at Vanguard. Argggg.... Such a great opportunity to buy long-dated LEAPS today.

I hope you don't get the same opportunity tomorrow

 

[bhuwan]

There was a tweet (another thread on TMC) about another ms fire in Nashville

 

[FluxCap]

I'm really annoyed -- I'm shifting my accounts from TD Ameritrade to Vanguard, and so my TDA accounts are in lock-down, but the securities/money aren't yet available at Vanguard. Argggg.... Such a great opportunity to buy long-dated LEAPS today.

Out of curiosity Robert, why the switch away from TD Ameritrade to Vanguard?