Some views on current price action

[jesselivenomore]

If this breakout holds, the standard measured move is an extension of the trading range. 180-280 was the consolidation range, so a breakout measures to 100 points higher, 380. I think this is what you would see from a lot of technical traders. However, this would fail to take into account the length of the consolidation. The longer the timeframe of the consolidation, the more built up pressure once it breaks. If it was a 1 year range of $100, I would be comfortable with a measured move of $100, but after over 3 years, the potential upside is now higher.

With that said, again IF this breakout holds, there isn't going to be a lot more actionable trades from me going forward. To me it is all about doing the preparation work to set up the trade - what we've been doing now the past few months - but once the trade is put on(and I am out of bullets now) it is time to just sit tight and wait. It will either work out, or if it is a fakeout then I'll have to manage it. Not much else to say or do.

Revisiting this thread since we hit the initial target of 380. Like I said before, just because we've reached the measured move, does not necessarily mean the move is over. We'd have to examine the current price action to determine if that is the case. Looking at TSLA on its own, it does not look like we've reached a top yet on longer term time frames. However, there are signs that the overall market is headed for a short/medium term pullback(also not a long term top). Due to this, I've deleveraged what I added around $280, and shorted some nasdaq futures to hedge my core position. I am also looking to short some Ford as a further hedge and might actually hang on to that even after the pullback is over. Just a quick update, I can post some charts to explain later when I have time.

 

[TMSE]

Revisiting this thread since we hit the initial target of 380. Like I said before, just because we've reached the measured move, does not necessarily mean the move is over. We'd have to examine the current price action to determine if that is the case. Looking at TSLA on its own, it does not look like we've reached a top yet on longer term time frames. However, there are signs that the overall market is headed for a short/medium term pullback(also not a long term top). Due to this, I've deleveraged what I added around $280, and shorted some nasdaq futures to hedge my core position. I am also looking to short some Ford as a further hedge and might actually hang on to that even after the pullback is over. Just a quick update, I can post some charts to explain later when I have time.

What is the short/medium term? 1 mo/1 quarter?

 

[jesselivenomore]

What is the short/medium term? 1 mo/1 quarter?

ST is about 2 weeks, MT 2 months. So best case a quick 2 week pullback, worst case more extended 2 month decline(maybe even close to a nominal "bear market", -15-20%). Well, technically best case is I'm just wrong and we go back up tomorrow.

 

[AlMc]

Revisiting this thread since we hit the initial target of 380. Like I said before, just because we've reached the measured move, does not necessarily mean the move is over. We'd have to examine the current price action to determine if that is the case. Looking at TSLA on its own, it does not look like we've reached a top yet on longer term time frames. However, there are signs that the overall market is headed for a short/medium term pullback(also not a long term top). Due to this, I've deleveraged what I added around $280, and shorted some nasdaq futures to hedge my core position. I am also looking to short some Ford as a further hedge and might actually hang on to that even after the pullback is over. Just a quick update, I can post some charts to explain later when I have time.

I know several TMCers, including me, that would much appreciate the chart(s) you mentioned and your interpretation.
Thanks

 

[neroden]

Revisiting this thread since we hit the initial target of 380. Like I said before, just because we've reached the measured move, does not necessarily mean the move is over. We'd have to examine the current price action to determine if that is the case. Looking at TSLA on its own, it does not look like we've reached a top yet on longer term time frames. However, there are signs that the overall market is headed for a short/medium term pullback(also not a long term top). Due to this, I've deleveraged what I added around $280, and shorted some nasdaq futures to hedge my core position. I am also looking to short some Ford as a further hedge and might actually hang on to that even after the pullback is over. Just a quick update, I can post some charts to explain later when I have time.

Thank you. I do like to see your technical analysis. It's something I'm dabbling in learning (although it will never be my primary investment method) so I like to learn from the best.

 

[TMSE]

I know several TMCers, including me, that would much appreciate the chart(s) you mentioned and your interpretation.
Thanks

I second that.

 

[FluxCap]

Just visiting this thread to say that I like it, and I needed somewhere to post that I called the bottom today perfectly, cashing out my VIX calls and buying some TSLA weeklies for fun with proceeds.

I still think we are headed to either 450+ or closer to 300 by August as Model 3 "D-Day" passes, and am holding that strangle accordingly.

I'm interested in strategies and thoughts on this price action that aren't ultra cheerleader quadruple-leveraged long with margin on your house or Tesla is a ponzi scheme on its way to bankruptcy, so please chime in, measured traders.

 

[AlMc]

I bought Sept $300 puts yesterday. I have enough invested in the upside long/medium term.

Put some 'mad money' to work at $355 today. I call it 'mad money' because it implies I am angry /insane. I will allow others to pick the adjective.

The mad money went to 100 June 30 $370 strike calls. Paid 40 cents. Sold 70 a few moments ago for 70 cents.

I do not claim to know which way the market will go. I do believe that the Fed wants to unload some of it's 'debt' so are trying to slow the markets a bit with their comments. Not a true Aluminum foil hat conspiracy but a wish on their part.

As for TSLA: July=August is all about the '3'. Good '3' reveal/ramp. (my definition is reveal 3rd week of July with delivery of a few hundred cars by July 31st and 1000+ in August) we see $400+. Poor '3' (my definition: Token deliver, like the X, at the end of the month and sub 1,000 deliveries in August) then we see $300

 

[FluxCap]

I bought Sept $300 puts yesterday. I have enough invested in the upside long/medium term.

Put some 'mad money' to work at $355 today. I call it 'mad money' because it implies I am angry /insane. I will allow others to pick the adjective.

The mad money went to 100 June 30 $370 strike calls. Paid 40 cents. Sold 70 a few moments ago for 70 cents.

I do not claim to know which way the market will go. I do believe that the Fed wants to unload some of it's 'debt' so are trying to slow the markets a bit with their comments. Not a true Aluminum foil hat conspiracy but a wish on their part.

As for TSLA: July=August is all about the '3'. Good '3' reveal/ramp. (my definition is reveal 3rd week of July with delivery of a few hundred cars by July 31st and 1000+ in August) we see $400+. Poor '3' (my definition: Token deliver, like the X, at the end of the month and sub 1,000 deliveries in August) then we see $300

Al -- I made the EXACT SAME TRADE on those dailies. Literally same strike and quantity and within a nickel of your buy and sell price. That's got to mean something cosmic!

The scenario on 3 reveal you outline is just about precisely my take as well. I don't think there is a middle ground for this seminal event in the company's history, and my view is that TSLA is going to move sharply on what happens in the next 4 weeks. That said, one could argue that the current price reflects both risks of delays/problems/failures and upside risks of perfect, flawless and speedy production ramp. But I just don't think the price stays put this month.

 

[AlMc]

Al -- I made the EXACT SAME TRADE on those dailies. Literally same strike and quantity and within a nickel of your buy and sell price. That's got to mean something cosmic!

The scenario on 3 reveal you outline is just about precisely my take as well. I don't think there is a middle ground for this seminal event in the company's history, and my view is that TSLA is going to move sharply on what happens in the next 4 weeks. That said, one could argue that the current price reflects both risks of delays/problems/failures and upside risks of perfect, flawless and speedy production ramp. But I just don't think the price stays put this month.

So, was your 'mad money' a trade because of anger or insanity. Mine was probably a little of each!

PS: We got out a little early as those went up to $1. I still am holding 30 for tomorrow.

 

[Jonathan Hewitt]

Just visiting this thread to say that I like it, and I needed somewhere to post that I called the bottom today perfectly, cashing out my VIX calls and buying some TSLA weeklies for fun with proceeds.

I still think we are headed to either 450+ or closer to 300 by August as Model 3 "D-Day" passes, and am holding that strangle accordingly.

I'm interested in strategies and thoughts on this price action that aren't ultra cheerleader quadruple-leveraged long with margin on your house or Tesla is a ponzi scheme on its way to bankruptcy, so please chime in, measured traders.

I'm very leveraged so maybe I don't qualify for answering but I think there is a real chance of Model 3 launch being a sell the news event, mostly if there is nothing "surprising" about it or Elon is late on launch. On the other hand, if we get the "July surprise" type event then almost no chance of sell the news, IMO. If we do get sell the news then I expect a recovery pretty quick by August options expiry as the Model 3 ramps up and we approach the Semi reveal. It's also possible we have to wait for positive earnings on the Model 3 for good upward movement but I think once large numbers of Model 3 are on the street no one is going to wait for positive earnings, it will be buy buy buy time.

My main way of dealing with all this is being highly leveraged with some straight call options and call spreads, butterflies, calendars, and diagonals in August and September in addition to my normal Jan 2019 and stock positions BUT maintaining a good amount of cash. The purpose of the cash is for a possible dip. If we don't get the dip then I'm ok with straight up movement as my funds that are invested are very leveraged.

One great way to deal with a likely sell the news in July but maintain leverage would be to set up a vertical or calendar type spread. You could short OTM July calls and buy OTM August or September calls. By shorting July calls you are giving yourself a discount on the August and/or September calls but still maintain profit potential to the upside if July does not have sell the news or Model 3 delay. I've personally sold August options and bought September options. The July options didn't give me as much premium as I wanted and by doing August/September spreads I was able to do more contracts due to the less cost per contract (more contacts=more leveraged). One negative to this strategy is that it shines when IV increases after putting on the strategy as the longer dated options have a higher Vega but TSLA IV is already approaching 52 week highs. Further IV increase may not happen. I think it's worth a shot though for a small position while maintaining majority of money in core stock and Jan 2019 DITM LEAPS.

All this is assuming no macro related shocks. That is a poor assumption as this week as proved but I don't have the ability to predict what macro will do over the next 6 months.

 

[FluxCap]

Thanks for chiming in, Jonathan. You are right about IV being super elevated, and it sounds like DITM is a good strat if leveraging long with LEAPS. The calendar spread is a decent play as well, depending on how things shake out (and how fast price moves).

Al - my trade was because I saw volume declining and price stabilizing a bit in NASDAQ names, VIX leveling off, and I felt the market was bottoming locally, and TSLA calls were a decent vehicle to scalp a few nickels. Still blows my mind that we made literally the same trade at same times.

 

[bdy0627]

Nice ultra short play guys. I was looking to do something short term today but not THAT short term. I'm not experienced enough with options yet to go that route. I'm somewhat leveraged going into July but still mostly carrying shares. I am somewhat concerned about macro not assisting with a July TSLA climb as well as a possible sell the news reaction after the M3 reveal. The market kinda expects a surprise since Tesla has been secretive about the final Model 3 configuration. I'm not so sure there is going to be that much of a surprise. I also think Tesla will go slow with the ramp for the first couple of months to work through any kinks. I think it will be employee cars only for July, August, and September. I agree with Jonathan that once there are thousands of M3s out there, the share price will launch. I have not delved into puts yet but am considering it as a little insurance for July/August. What do you guys think about buying some puts going into July? I don't want to waste much money on it but would consider it insurance against my leverage. Thoughts?

 

[neroden]

The high IV combined with the drop in stock price caused me to sell a bunch more Deep Out of the Money puts. I went up from $300 strike to $320 strike, which I'ms till a leeetle bit uncomfortable with, but I can sleep.

I also just found out that "cash-secured equity puts" can be secured by margin capacity. (Somewhat counterintuitive name there.) Without paying interest. Reevaluated my strategy. Still not comfortable with serious margin exposure, but I promptly put the cash securing my puts into T-bills, 'cause why not get an extra 1%. Also I'm not currently worried about making sure my TSLA shares are on the "cash side" because Securities Lending Fully Paid isn't paying anything right now; if it does, however, I'll have to make a point of putting TSLA on the "cash side" and making sure the margin capacity is secured against other assets.

 

[bonaire]

The high IV combined with the drop in stock price caused me to sell a bunch more Deep Out of the Money puts. I went up from $300 strike to $320 strike, which I'ms till a leeetle bit uncomfortable with, but I can sleep.

I also just found out that "cash-secured equity puts" can be secured by margin capacity. (Somewhat counterintuitive name there.) Without paying interest. Reevaluated my strategy. Still not comfortable with serious margin exposure, but I promptly put the cash securing my puts into T-bills, 'cause why not get an extra 1%. Also I'm not currently worried about making sure my TSLA shares are on the "cash side" because Securities Lending Fully Paid isn't paying anything right now; if it does, however, I'll have to make a point of putting TSLA on the "cash side" and making sure the margin capacity is secured against other assets.

I do that for many equities in my brokerage acct. I've done very well selling naked puts the last few years in a lot of healthy stocks - some well OTM and maybe too OTM and too far out in the future for regular investing (many prefer 56-60 days out, not LEAPs). Examples include 20,23,25 Jan'18 puts on SCCO (Southern Copper - hey if you like EVs, invest in Copper). I probably could have just bought the dips in equities and held stocks but selling high volatility OTM puts is a synthetic long postiion. I also follow Buffett and think that PSX (yeah, I know) is a strong enough stock to sell puts against when it dips. That's made me many car-payments in return. I like to try to sell a put with $1.50-2.00 value long enough out to let them at least drop to half price before closing out. If you don't like $2, go for $1 value and double size.

You can make "ok money" selling 2019 200 TSLA puts if that is a comfortable thing, for example. And less margin is "set aside" against it due to the lower strike price than your 320s. Each quarterly release for TSLA raises volatility around the date so selling well OTM calls or puts allows you to react if there is a real change coming.

Funds seem to just use our 401k money and others' money and buy large holdings of stocks. I think that isn't as useful as trading "around" the market via options. Firms like Susquahanna and Citadel are usually counter-parties to many of our retail options trades.

 

[neroden]

One of the complexities I'm dealing with is different levels of options authorization on different accounts *grinds teeth*

 

[bonaire]

Interesting thing about Vanguard brokerage is they do not let someone sell naked calls, only puts. Of course, OTM covered calls are encouraged if you want added income.

 

[TMSE]

@jesselivenomore Looking forward to your take on current developments and related price actions. Thanks

 

[jesselivenomore]

Doubt it will be a V bottom so watch for more turbulence, but starting to nibble back in today. I'm actually on a family vacation right now so sorry can't elaborate.

 

[Sparky]

So, I've stop-lossed out of all but 20% of my trading shares.
"Circuit-breakers" started tripping in the $350's and my most recent 25% was sold around $322. My usual pattern is to wait at least 10 days before getting back in after considering the reasons for the drop. I set the stop-losses based partly on @jesselivenomore 's TA indicating $380 to be something of a ceiling. Once we hit that, I started protecting. I don't do TA but I'm not too proud to follow others here who seem to know what's what.
Today, I kinda got impatient thinking this may be a V-bottom and put a buy order in at $300.50. Didn't execute so, I'm back to sitting on the sidelines with a lot of cash. The drops are usually more steep than the rises it seems and I don't see anything about Tesla's fundamentals to change my expectations that, barring a macro issue, we'll be pushing $400 soon enough. Patience & discipline. There will be shares I can buy next week. With some luck, I'll end up with more than I had 2 weeks ago.